Bublar Group Reason: Initiating Coverage Company Sponsored Research Consolidating the XR Space Not Rated

Equity Research - 29 June 2020 06:45 CET

Bublar Group Reason: Initiating coverage Company sponsored research Consolidating the XR space Not rated

 M&A driven growth story within XR software

 Forecast ’22e sales of SEK 330m, 7.0% EBITDA margin  SOTP fair value range of SEK 2.8-7.9 per share Share price (SEK) 3 .8 26/06/2020 IT, Sweden Riding on the back of strong structural trends in XR BUBL.ST/BUBL SS The Bublar Group is a conglomerate currently consisting of four companies, which is leveraging its proprietary technology within MCap (SEKm) 358 extended reality (XR), augmented reality (AR), motion capture and visual MCap (EURm) 34.1 effects (VFX), with the ambition of becoming the global leader within the Net debt (EURm) -4 space. The group implements an M&A-driven growth strategy, recently adding ~SEK 200m in sales by acquiring the award winning VFX studio No. of shares (m) 94.2 Goodbye Kansas Studios. Bublar’s underlying markets are exhibiting Free float (%) 100.0 rapid growth, following increased adoption of its key technologies and expansion of applicable areas, where for example the XR market is Av. daily volume (k) 15.2 expected to grow at a CAGR of ~65% between 2019 and 2025, according to Mordor Intelligence. Next event Q2 report: 21 Aug

Set to reap the rewards of continued software investments Performance We anticipate that Bublar Group will experience accelerated growth in 400 our forecast period. Key drivers are: the commercialization and 350 appropriate packaging of its platforms via Vobling and Sayduck, the 300 imminent release of Otherworld Heroes and Hello Kitty AR: Kawaii World 250 200 from Virtual Brains, and Goodbye Kansas Studios opting to enter more 150

extensive framework agreements with its key customers and leveraging 100

its proprietary software through a licensing model. As such, we estimate 50

that revenue will increase from SEK 144m in ’20e to SEK 330m in ’22e,

Jul 18 Jul

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May 19 May May 20 May with an EBITDA margin of 7.0% in ‘22e. We point out that Goodbye Bublar Group OMX STH PI Kansas Studios was included in the group from 1 May 2020. 1m 3m 12m EV/sales 2.2x-0.9x for ’20e-’22e, SOTP SEK 2.8-7.9 per share Absolute (%) -20.2 22.8 -5.0 OMX STH PI (%) 3.3 18.0 5.8 We utilise a sum-of-the-parts valuation in order to determine a fair value Source: FactSet range for Bublar Group, given that the company’s segments differ quite a bit. By discounting our ‘21 sales estimates with a WACC of 12.0%, and applying a range of relevant peer multiples, we find a fair value range of SEK 2.8-7.9 per share.

Lead analyst: Jesper Birch-Jensen Simon Granath

2020e 2021e 2022e SEKm 2018 2019 2020e 2021e 2022e P/E (x) -8.3 -20.4 -57.3 Sales 3 17 144 289 330 P/E adj (x) -8.3 -20.4 -57.3 EBITDA -20 -31 -18 12 23 P/BVPS (x) 2.26 2.61 2.81 EBITDA margin (%) -572.3 -182.2 -12.8 4.0 7.1 EV/EBITDA (x) -17.9 27.9 13.3 EBIT adj -25 -46 -45 -18 -7 EV/EBIT adj (x) -7.3 -17.8 -47.8 EBIT adj margin (%) -712.3 -267.8 -31.4 -6.3 -2.0 EV/sales (x) 2.29 1.13 0.94 Pretax profit -25 -46 -45 -18 -7 ROE adj (%) -35.6 -12.4 -4.9 EPS rep -0.61 -0.78 -0.46 -0.19 -0.07 Dividend yield (%) 0 0 0 EPS adj -0.61 -0.78 -0.46 -0.19 -0.07 FCF yield (%) -43.9 1.2 3.9 Sales growth (%) na 392.0 742.8 100.7 14.2 Lease adj. FCF yld (%) -43.9 1.2 3.9 EPS growth (%) -63.3 -26.6 40.6 59.4 64.5 Net IB debt/EBITDA 2.3 -4.1 -2.6 Lease adj. ND/EBITDA 2.3 -4.1 -2.6 Source: ABG Sundal Collier, Company data Please refer to important disclosures at the end of this report This research product is commissioned and paid for by the company covered in this report. As such, this report is deemed to constitute an acceptable minor non-monetary benefit (i.e. not investment research) as defined in MiFID II. Bublar Group

Opportunities Risks We anticipate that Bublar Group will enjoy accelerated We see financial risk given if Bublar’s internally growth in our forecast period. Key drivers are: the developed games, Otherworld Heroes and Hello Kitty AR: commercialization and appropriate packaging of its Kawaii World, are unsuccessful, Bublar will likely have to platforms via Vobling and Sayduck, the imminent release raise additional funds. Furthermore, there is a of Otherworld Heroes and Hello Kitty AR: Kawaii World competitive risk where larger companies with greater from Virtual Brains, and Goodbye Kansas Studios opting funding could develop their own platforms to compete to enter more extensive framework agreements with its with, for example, Vobling and Sayduck. key customers and leveraging its proprietary software through a licensing model.

Sales estimates, 2019-2022e, SEKm EBITDA estimates, 2019-2022e, SEKm

350 30

300 20

250 10

200 0

150 -10

100 -20

50 -30

0 -40 2019 2020e 2021e 2022e 2019 2020e 2021e 2022e

Sales Sales

Source: ABG Sundal Collier, Company data Source: ABG Sundal Collier, Company data

Quarterly sales and adj. EBIT, SEKm Company description The Bublar Group of today is a conglomerate of four 70 0.0 companies that leverage its proprietary technology within 60 -2.0 extended realty (XR), augmented reality (AR), motion 50 -4.0 capture and visual effects (VFX) with the aim of becoming the global leader within the space. The group 40 -6.0 has an M&A-driven growth strategy and it recently added 30 -8.0 ~SEK 200m in sales by acquiring the award winning VFX

20 -10.0 studio Goodbye Kansas Studios.

10 -12.0

0 -14.0

quarterly sales quarterly adj. EBIT Source: ABG Sundal Collier, Company data

29 June 2020 ABG Sundal Collier 2

Bublar Group

Contents

Summary ...... 4

Bublar Group in a nutshell ...... 8

Product technology ...... 17

Market overview ...... 19

Market drivers and trends ...... 25

Competitive landscape ...... 31

Estimates and forecasts ...... 34

Valuation ...... 40

Appendix: Management ...... 42

Appendix: Shareholders ...... 44

29 June 2020 ABG Sundal Collier 3

Bublar Group

Summary

The Bublar Group of today is a conglomerate currently consisting of four companies, which is leveraging its proprietary technology within extended realty (XR), augmented reality (AR), motion capture and visual effects (VFX) with the ambition of becoming the global leader within the space. The group implements an M&A driven growth strategy and it recently added ~SEK 200m in sales by acquiring the award winning VFX studio Goodbye Kansas Studios. Although the company is still in the early stages of packaging and commercialising its product offering, we look with favour upon its potential, and through a sum-of-the-parts valuation we find a fair value range of SEK 2.8-7.9 per share.

Bublar Group today Bublar Group is a conglomerate composed of four companies: Vobling, Sayduck, Virtual Brains and Goodbye Kansas Studios. The subsidiaries offer extended reality (XR) solutions for enterprises, 3D models and augmented reality (AR) visualisation for e-commerce, location-based AR games towards consumers and advanced visual effects (VFX), motion capture and artwork services for production companies in the movie, TV and gaming industries.

Bublar is coming out of an intensive two and a half year period with three acquisitions, taking the headcount from 17 to over 200. The firm offers products and services, within its business segments Work, Shop, Play and Goodbye Kansas Studios, towards businesses and consumers. Bublar has a global presence through its offices in Sweden, Finland, Germany, the UK, the US, Singapore and the Philippines.

The company has customers that include Alfa Laval, SAAB, Cargotec, Ubisoft and Volvo Cars. For Bublar, the upcoming releases of Otherworld Heroes and Hello Kitty AR: Kawaii world, the transition towards licensing and recurring revenue in the enterprise segment, leveraging the IP and striving towards operating excellence within Goodbye Kansas, are of utmost importance to propel the company to the next level.

Product overview Bublar is active within four segments: Work, Shop and Play focus on extended reality, while Goodbye Kansas Studios offers VFX, motion capture and artwork for the movie, TV and gaming industries.

Business Segments

Source: ABG Sundal Collier, company data

29 June 2020 ABG Sundal Collier 4

Bublar Group

Work (Vobling) creates extended reality applications, services and content for enterprise customers. SJ, SAAB and Cargotec are some of the companies that utilise XR technology from Vobling today. Shop (Sayduck) enables e-commerce to showcase their products in a customer orientated way through 3D models and augmented reality. Shopify and Rimasys are clients of Sayduck. Play (Virtual Brains) develops and publishes location based AR games. Otherworld Heroes and Hello Kitty AR: Kawaii World are two titles currently under development by Virtual Brains. Goodbye Kansas Studios creates trailers and cinematics for the gaming industry as well as providing artwork, VFX and motion capture for movies and games. M&A-driven growth strategy Bublar has an M&A driven growth strategy, having acquired Vobling (Work) in 2018 Sayduck (Shop) in 2019, and Goodbye Kansas Studios in 2020. The rationale behind the acquisitions has been to leverage the subsidiaries technology and platforms within VR/AR, to become the leading player within the space. We believe that Bublar will continue its acquisition strategy going forward, assuming that financing is readily available and target prices remain favourable.

Market overview Enterprise XR Market The growth of XR within the enterprise market is primarily driven by high ROI and clear use cases. The areas where customer adoption is most extensive is within worker training, remote assistance & instructions and collaboration & visualisation. In the coming years, education, architecture, engineering & construction (AEC) and healthcare are expected to be the busiest sectors1. E-commerce The e-commerce market is expected to grow by 16.6% between 2019 and 2023, driven by the continued shift from brick-and-mortar retailing to e-commerce. The largest obstacle hindering buyers that shop online is seeing and trying items before purchasing2. AR and 3D models provide the tools that e-commerce needs to break down those obstacles. Mobile gaming Smartphones are used for playing mobile games, making smartphone penetration key for mobile gaming. Penetration was 38% in 2018 and is expected to reach 45% in 20203. As of 2019, the mobile gaming market is expected to generate USD 68.5 billion in revenue4. The casual and hyper-casual game genres dominate the market in terms of the number of players, with 82% of all games downloaded in 2019. Goodbye Kansas Studios The market for VFX was estimated at USD 8.6bn in 2017 and is expected to grow at a 12.8% CAGR through 20205. Growth is predominantly driven by higher spending on original content and growth within the gaming industry67. The market for 3D motion capture is also growing at a considerable 10% CAGR according to Verified Market Research8.

1 https://s3.amazonaws.com/media.mediapost.com/uploads/VRXindustryreport.pdf 2 https://assets.kpmg/content/dam/kpmg/xx/pdf/2017/01/the-truth-about-online-consumers.pdf 3 https://www.statista.com/statistics/203734/global-smartphone-penetration-per-capita-since-2005/ 4 https://newzoo.com/insights/articles/the-global-games-market-will-generate-152-1-billion-in-2019-as-the-u-s-overtakes-china-as-the- biggest-market/ 5 https://www.globenewswire.com/news-release/2018/09/27/1577156/0/en/Global-VFX-Market-Will-Reach-USD-19-985-64-Million-By-2024- Zion-Market-Research.html 6 https://www.tvtechnology.com/news/tv-content-spending-increased-50b-over-last-five-years 7 https://newzoo.com/insights/articles/the-global-games-market-will-generate-152-1-billion-in-2019-as-the-u-s-overtakes-china-as-the- biggest-market/ 8 https://www.verifiedmarketresearch.com/product/global-3d-motion-capture-market-size-and-forecast-to-2025/ 29 June 2020 ABG Sundal Collier 5

Bublar Group

Forecast overview We anticipate that Bublar Group will experience accelerated growth in our forecast period. Key drivers are: the commercialization and appropriate packaging of its platforms within Vobling and Sayduck, the imminent release of Otherworld Heroes and Hello Kitty AR: Kawaii World from Virtual Brains, and Goodbye Kansas Studios opting to enter more extensive framework agreements with its key customers and leveraging its proprietary software through a licensing model. As such, we estimate that revenue will increase from SEK 144m in ’20e to SEK 330m in ’22e, and we point out that Goodbye Kansas Studios was included in the group from 1 May 2020. Estimates overview (SEKm) (SEKm) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20e Q3'20e Q4'20e 2019 2020e 2021e 2022e Work - Vobling 4.7 3.2 3.0 4.4 3.9 3.6 4.0 5.7 15.3 17.2 22.4 26.8 Shop - Sayduck 0.0 0.0 1.1 0.8 0.7 1.3 1.6 1.4 1.9 4.9 6.5 7.8 Play - Virtual Brains 0.0 0.0 0.0 0.0 0.0 0.1 1.0 1.0 0.0 2.1 32.1 38.8 Goodbye Kansas Studio 0.0 0.0 0.0 0.0 0.0 29.7 40.0 50.0 0.0 119.7 228.0 256.5 Net Sales 4.7 3.2 4.1 5.2 4.6 34.7 46.5 58.1 17.1 144.0 289.0 329.9

Capitalised production costs 0.0 0.0 0.0 1.0 1.2 1.4 1.0 1.0 1.0 4.6 5.0 5.0 Other operating income 0.1 0.2 0.2 0.0 0.4 0.0 0.0 0.0 0.5 0.4 0.0 0.0 Total operating income 4.8 3.4 4.2 6.2 6.3 36.1 47.5 59.1 18.6 149.0 294.0 334.9

COGS -4.5 -35.7 -67.6 -73.7 Gross profit 14.1 113.2 226.4 261.2

Opex -10.9 -12.6 -11.2 -15.1 -13.5 -38.4 -52.7 -62.8 -49.7 -167.4 -282.3 -311.4 Of w hich Other external expenses -4.1 -5.4 -4.4 -7.6 -6.3 -17.3 -23.7 -28.3 -16.7 -75.5 -127.0 -140.1 Personnel expenses -6.8 -7.1 -6.7 -7.5 -7.2 -21.1 -29.0 -34.6 -28.1 -91.9 -155.3 -171.3 Other operating expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.4 0.0 0.0 0.0

EBITDA -6.0 -9.2 -7.0 -8.9 -7.2 -2.3 -5.2 -3.8 -31.1 -18.5 11.7 23.5

D&A -3.2 -3.2 -4.1 -4.1 -4.1 -6.6 -8.0 -8.0 -14.6 -26.7 -30.0 -30.0

EBIT -9.2 -12.4 -11.1 -13.0 -11.3 -8.9 -13.2 -11.8 -45.7 -45.2 -18.3 -6.5

Non-recurring items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net financials 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0

EBT -9.2 -12.4 -11.1 -13.0 -11.3 -8.9 -13.2 -11.8 -45.7 -45.2 -18.3 -6.5

Taxes 0.0 0.0 0.0 -0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Tax rate 0.0% 0.0% 0.0% 0.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Net profit -9.2 -12.4 -15.8 -13.0 -11.3 -8.9 -13.2 -11.8 -45.7 -45.2 -18.3 -6.5

EPS Basic (SEK) -0.22 -0.30 -0.39 -0.25 -0.21 0.00 0.00 0.00 -0.83 -0.48 -0.19 -0.07 EPS Diluted (SEK) -0.22 -0.28 -0.35 -0.24 -0.19 -0.10 -0.14 -0.12 -0.78 -0.46 -0.19 -0.07 Grow th Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20e Q3'20e Q4'20e 2019 2020e 2021e 2022e Sales y-o-y 1516.2% 8661.1% 15808.0% 68.7% -0.4% 999.4% 1070.2% 1003.3% 392.0% 742.8% 100.7% 14.2% Sales organic y-o-y 46.2% -28.1% 7.5% 64.4% 53.5% 25.2% 46.1% 14.2% EBITDA y-o-y 29.6% 92.7% 97.8% 28.5% 20.2% -74.8% -26.6% -57.5% 85.0% -1.2% -59.4% -64.5% EBIT y-o-y 73.0% 127.5% 161.8% 33.9% 22.9% -28.3% 18.4% -9.2% 85.0% -1.2% -59.4% -64.5% Net profit y-o-y 71.9% 125.7% 271.0% 30.3% 22.9% -28.2% -16.9% -9.5% 81.8% -1.1% -59.4% -64.5% Margins Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20e Q3'20e Q4'20e 2019 2020e 2021e 2022e Gross margin 75.8% 76.0% 77.0% 78.0% EBITDA margin -124.7% -274.8% -169.1% -142.0% -115.5% -6.4% -10.8% -6.4% -167.5% -12.4% 4.0% 7.0% EBIT margin -191.1% -371.3% -267.4% -207.8% -181.1% -24.7% -27.7% -19.9% -246.3% -30.3% -6.2% -1.9% Net margin -191.0% -370.5% -381.0% -208.6% -181.1% -24.7% -27.7% -19.9% -245.9% -30.3% -6.2% -1.9%

Source: ABG Sundal Collier, company data

Valuation overview We utilise a three sum-of-the-parts valuations in order to determine a fair value range for Bublar Group given that the company’s segments differ a lot. By lowering our ‘21e sales estimates with a WACC of 12.0%, and applying relevant peer multiples, we find a fair value range of SEK 2.8-7.9 per share.

Sum-of-the-parts valuation SOTP (SEKm) Scenario 1 Valuation Value per share Scenario 2 Valuation Value per share Scenario 3 Valuation Value per share

Work - Vobling 2.0x EV/Sales 21e 45 0.5 5.0x EV/Sales 21e 112 1.2 6.0x EV/Sales 21e 134 1.4 Shop - Sayduck 2.0x EV/Sales 21e 13 0.1 5.0x EV/Sales 21e 32 0.3 6.0x EV/Sales 21e 39 0.4 Play - Virtual Brains 1.0x EV/Sales 21e 32 0.3 2.0x EV/Sales 21e 64 0.7 3.0x EV/Sales 21e 96 1.0 Goodbye Kansas Studio .8x EV/Sales 21e 171 1.8 1.5x EV/Sales 21e 342 3.6 2.5x EV/Sales 21e 570 6.1 Enterprise value 261 2.8 Enterprise value 551 5.8 Enterprise value 840 8.9 Net debt (21e) -47 -0.5 Net debt (21e) -47 -0.5 Net debt (21e) -47 -0.5 Market cap 308 3.3 Market cap 598 6.3 Market cap 887 9.4 Discounted (12% WACC) 260 2.8 Discounted (12% WACC) 504 5.3 Discounted (12% WACC) 748 7.9

Source: ABG Sundal Collier, company data

29 June 2020 ABG Sundal Collier 6

Bublar Group

Key risks Competitive risks Large players within the XR market include Microsoft, Facebook, Google and HTC. These companies have large amounts of developing and marketing power at their disposal. They could develop their own platforms to compete with Vobling and Sayduck’s offering. The competition in the mobile gaming space is fierce with hundreds of games released most days. Generating initial traction and keeping an active player base requires a seasoned team, a great game or luck. The VFX and motion capture market is highly competitive and low operating margins are haunting the space9. This makes the ability to budget and calculate the cost of each projects important, as a small error could lead to large losses.

Technology and product risk As the market for XR is still in its embryo, the market structure is yet to be solidified and there are uncertainties regarding which platform and technology will be the dominant one going forward. The XR market is expected to grow at a 65%10 CAGR between 2019 and 2025, but there could be large variations regarding which parts of the value chain that will benefit.

Casual and location based gaming has been popular for some years but a shift in consumer preference could hurt Bublar’s focused game offering of location based games. Goodbye Kansas has been in a sweet spot during the last decade because superhero movies was the hottest category on both large- and small screens. If consumer tastes were to shift to a category that demanded less special effects, the company could suffer.

Financial risk Bublar as a group has never turned a profit in its, albeit short, history. Since Q3’16, the company has raised SEK 230m in share issues in addition to the consideration of shares issued as partial payment for acquisitions. During the same time period, the company has had a negative operating cash flow of SEK 74m. Moreover, if the Otherworld Heroes and Hello Kitty AR: Kawaii World are unsuccessful, there is a large chance that Bublar will have to raise additional funding. Furthermore, Goodbye Kansas Studios is in the middle of a turnaround, which is associated with some additional risks.

Organisational risk A small organisation spread out across the globe entails communication difficulties. While the company is growing, managerial and organisational risks could harm prospects even though their products are fit for the market. The acquisitions are adding a managerial burden and, given the size of Goodbye Kansas, it could lead to implementation difficulties.

9 https://variety.com/2018/artisans/production/vfx-summer-box-office-1202824543/ 10 https://www.mordorintelligence.com/industry-reports/extended-reality-xr-market 29 June 2020 ABG Sundal Collier 7

Bublar Group

Bublar Group in short

Bublar Group started as an XR company with a focus on visualisation and gaming in 2015. Since then, it has increased its presence in the XR market by acquiring the B2B solutions companies Vobling in 2018 and the retail oriented Sayduck in 2019. In May 2020, the company acquired Goodbye Kansas Studios, a leader in motion capture, VFX and design, strengthening Bublar’s knowledge base and increasing its annual revenue by approximately SEK 200m overnight. The two firms see synergies in cross-selling, combined development and knowledge sharing and a broader product offering. In our view, Bublar now stands ready to capture the growth in the fields of XR- entertainment, shopping, enterprise & training as well as within VFX and motion capture.

Magnus Granqvist (CEO of Virtual Brains) and Kenneth Häggmark (CTO) founded Bublar Group in late 2015 with the idea of creating a platform for enhanced reality.

In 2018, Bublar secured the rights to create an AR-based Hello Kitty game when the company signed an agreement with Japanese Sanrio. The Hello Kitty brand is recognized around the world and the official Facebook page has more than 12.5 million followers, compared to Pokémon’s 7.5 million. The game will be further developed in tandem with the company’s other game, Otherworld Heroes.

Extended reality (XR) is an expression describing both augmented reality (AR) and virtual reality (VR). In AR, you use a screen of some sort to improve or enhance the reality. In VR, you are fully emerged in a virtual world, using VR goggles. The market for XR is expected to grow by 65% between 2019 and 202511.

The company first listed its share on NGM Nordic MTF in 2017, and it moved to Nasdaq First North Growth Market in 2019. Since Q3’2016, Bublar has since raised SEK 230m through share issues to fuel the ongoing development and the acquisition of Vobling, Sayduck and Goodbye Kansas Studios.

Today, Bublar’s workforce amounts to roughly 200 people with it is headquarters in Stockholm, where a majority of the workforce is situated. Vobling has its offices in Helsinki and the Philippines, Goodbye Kansas has 30 people working in London and maintains offices in Hamburg and Los Angeles.

Helsinki London Stockholm Los Angles Hamburg

Manilla Singapore

Source: ABG Sundal Collier, company data

11 https://www.mordorintelligence.com/industry-reports/mobile-games-market/ 29 June 2020 ABG Sundal Collier 8

Bublar Group

Business segments Bublar has four different segments with specific characteristics and niche products. Below we highlight each operating segment’s history and business operations.

Work segment Vobling was founded in 2015 with the firm ambition to solve real problems and create value for enterprises by utilizing XR technologies. The company has customers such as SAAB, Tobii, SJ, Kalmar (Cargotech Sweden) and Alfa Laval. In 2018, Vobling was acquired by Bublar group. Vobling’s offering is based on platform development and the company creates applications and simulators to use in work training, sales and design processes. In 2019, the majority of the revenue was consultancy based, but Vobling is working towards creating more scalable products that can be adapted or licensed out to customers. Vobling has developed a firefighter simulator for the Norwegian train operator VY. Recently it entered into a reseller agreement based on license income with Dafo for its new off-the-shelf product VR Fire Trainer.

Vobling’s VR Fire Trainer

Source: ABG Sundal Collier, company data

Vobling’s business model is to create services that improve efficiency and save costs compared to a customer’s old model. One example is the training platform for SJ that allows the company to train its workers without having to use a train, which saves costs by not tying up trains and improves efficiency because several types of trains can be trained on in the same session.

SJ Virtual Training Platform

Source: ABG Sundal Collier, company data

The platform that the SJ Virtual Training Platform is based on can be used for other companies and situations by redesigning the visual content.

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Bublar Group

Shop segment Co-founded by current CEO Niklas Slotte in 2012, Sayduck offers solutions and services for ecommerce to display their products in 3D and AR, allowing customers to view the product in a more realistic way. A 3D product allows the customer to twist and turn the product, viewing it from several angles. Creating a 3D model of simpler items, such as a clothing or a piece of furniture, can be done by taking several photos of it in a matter of minutes. More complex products that require many components to be modelled can take many hours depending on the complexity and the size of the item12.

Sayduck’s model of a Adidas headphones by Zound Industries

Source: ABG Sundal Collier, company data

According to Forbes13, AR improves customer engagement, and 40% of customers are willing to pay more for a product if they can experience it in an augmented reality beforehand. In addition, AR improves the sales processes for products that are hard to move but benefits from an ocular inspection, such as Rimasys’ surgical training platform. Home furnishing is another area where AR potentially can help the business, with Sayduck, for example, enabling companies to put their products in customers’ homes, increasing the likelihood of a purchase14. For example Pixels.com uses this solution.

Augmented Kalmar forklift truck Sayduck’s platform enable AR for e-commerce

Source: ABG Sundal Collier, company data Source: ABG Sundal Collier, company data

12 https://thinkmobiles.com/blog/how-much-cost-create-3d-model/ 13 https://www.forbes.com/sites/cognitiveworld/2019/10/01/retailers-have-a-lot-to-gain-from-ar-and-vr/#21bd5a017a1c 14 https://www.nextechar.com/blog/ar-can-increase-sales-customer-shopping-experience 29 June 2020 ABG Sundal Collier 10

Bublar Group

Play segment Virtual Brains is Bublar’s game development studio with two upcoming location- based AR games, Otherworld Heroes and Hello Kitty AR: Kawaii World. Both games are based on the in-house developed location-based mobile gaming platform. The platform has been a large investment for Bublar and the upcoming releases are not only major releases but a way to showcase its technology. If successful, the company is open to license out its platform to other developers.

Bublar has developed its own platform for creating so-called Real-World Games. This growing game genre is based on mobile games where reality integrates with the fantasy world and where game content is placed as a digital layer around the world. Through the platform, Bublar says it can create immersive and imaginative 3D worlds that transform map data in real time. Real map data such as roads, parks or schoolyards are reproduced in map mode such as mysterious paths or historic palaces and can be created for selected areas or mass produced linked to the real world all over the globe. Furthermore, the platform can manage and share players' GPS positions in real time so that players' avatars can be visualized on the map and enable players to interact with each other collaborating on different missions.

Bublar’s AR gaming platform

Source: ABG Sundal Collier, company data

Bublar´s system is designed to flexibly handle large volumes of concurrent users who interact with each other in real time as well as with data. This linked to real- world positions and visualized in mapping systems and in augmented reality via the mobile camera or next-generation smart glasses.

In other words, it claims it supplies much of what is needed to create the real-time online games of the future that provide a new form of mobile gaming experience. The company says that common to both its own IP development and value proposition as a game studio is that Bublar possesses know-how and technology for its unique MMO platform for location-based games and applications.

Bublar claims that its location-based technology, along with the way its games are designed, opens up a third source of revenue where the business model for F2P mobile games typically has only two sources of revenue:  In-app purchases (IAPs)  Advertising. The players can actively decide whether to watch a short video ad and in return be rewarded with an in-game bonus

29 June 2020 ABG Sundal Collier 11

Bublar Group

Through AR location-based marketing, Bublar allows companies to purchase sponsored locations inside the game that are linked to physical locations in the real world – thereby gaining access to a wide audience of players. The positions for which the company wants to buy marketing are visible to players on the game map as interactive content and enable players to direct players to physical locations in real life. Back-end of the AR gaming platform

Source: ABG Sundal Collier, company data

Otherworld Heroes Otherworld Heroes is a direct product of Bublar´s Real-World Games Platform – a unique multiplayer mobile game that, thanks to the platform, offers a new experience by being the first and largest AR location-based MMORPG, according to the company, where the players explore new worlds, fight magical battles, and complete missions together with their friends.

Bublar has held two beta tests, one in April 2019 and the other in February-March 2020. On 7 May, the game was soft-launched in Sweden, Poland and Indonesia in anticipation of a global release later in 2020.

The game has performed well given the lack of marketing. It was the 7th most downloaded RPG in Sweden one week after launch on iOS, while topping the list on Google Play15. Furthermore, reviews indicate solid gameplay. The game is expected to be in beta for a few more months until the full release. Otherworld Heroes is solely owned and developed by Bublar on its in-house gaming platform.

Otherworld Heroes

Source: ABG Sundal Collier, company data

15 https://sensortower.com/ios/US/bublar-group-ab/app/otherworld-heroes/ 29 June 2020 ABG Sundal Collier 12

Bublar Group

Hello Kitty AR: Kawaii World is developed in-house, with a license from Sanrio to make a location-based AR game. The licensing model is a profit after costs agreement and Bublar owns the rights for the game indefinitely. The marketing costs are borne by Bublar; however, Sanrio will provide some marketing through its own channels. Hello Kitty was expected to release in conjunction with the Tokyo Olympic Games, but due to the postponement from 2020 to 2021, Bublar had to make some changes to the in-game content, which may lead to a delay to the original release date. Looking at the brand, we note Hello Kitty is the second-best grossing media-franchise in the world, having grossed more than Mario and Harry Potter combined16. Kawaii World is described as Tamagotchi meets Animal Crossing, two titles that are popular with women in particular17. For the Hello Kitty- game, Bublar has partnered with the Google Maps platform to be able to use the most prominent map service in the world. Top ten highest-grossing media franchises, (USDbn)

Pokémon 92

Hello Kitty 80

Winnie the Pooh 70

Mickey Mouse 71

Star Wars 66

Anpanman 60

Disney Princess 45

Mario 36

Shonen Jump/Jump Comics 34

Harry Potter 31

0 10 20 30 40 50 60 70 80 90 100

Total Grossing (USD Billion) Source: ABG Sundal Collier, Titlemax, company data

Goodbye Kansas Studios Goodbye Kansas Studios was formed in 2017 when Bläck, Fido film, Imagination Studios and Pixel Grinder, four Swedish VFX- and motion capture-studios, merged. Goodbye Kansas offers services within VFX, artwork and motion captures aimed towards the development of movies, games, commercials and IP-creation. The business model is currently based on a work for hire model. However, the company is moving towards a more steady flow or revenues through framework agreements with, for example, gaming developers, spanning 2-3 years rather than a single project. Furthermore, over time we believe the company will package its proprietary motion capture software so it can be sold through a license model. Today, Goodbye Kansas has offices in Stockholm, Uppsala, London, Los Angeles and Hamburg. It was ranked the 12th most creative postproduction company in the world in 201918.

Visual effects Goodbye Kansas makes use of VFX in TV, movies, games and commercials. The services include, among others, concept art, creature & character design and asset building and 3D & 2D animation. VFX has gone from being limited to blockbuster movies and AAA games towards being implemented in most TV series, movie and game.

16 https://www.titlemax.com/discovery-center/money-finance/the-25-highest-grossing-media-franchises- of-all-time/ 17 https://www.vice.com/en_us/article/dp574m/in-praise-of-tamagotchi-683 18 https://goodbyekansasstudios.com/2051-2/ 29 June 2020 ABG Sundal Collier 13

Bublar Group

Stockholm before and after Goodbye Kansas VFX team

Source: ABG Sundal Collier, company data

Motion capture Motion capture is a relative new invention that became a hit after The Lord of the Rings trilogy, where Peter Jackson used motion capture to create Gollum19. Since then motion capture have been used in hundreds of movies to create life-like animations.

Goodbye Kansas Studios, motion capture setup for faces

Source: ABG Sundal Collier, company data

19 https://www.vulture.com/2018/12/andy-serkis-on-his-breakthrough-motion-capture-performances.html 29 June 2020 ABG Sundal Collier 14

Bublar Group

Goodbye Kansas uses its VFX, motion capture and artwork departments in its projects. The company has built a state of the art motion capture studio in its new facilities in Stockholm, where, for example, the studio has created the E3 cinematic trailer for Cyberpunk 2077, VFX for season 1 and 2 of Amazons Jack Ryan series and Volvos E.V.A campaign, to name a few.

Motion capture in action

Source: ABG Sundal Collier, company data

Revenue model Vobling is exclusively a business-to-business company. The sales process is both outreaching and request-based and generated from three revenue streams – consulting, licensing and support contracts. Consulting revenues are generated when the software or services are implemented and developed. Licensing fees are based on the number of copies that are sold and each time the program is used. Support stems from ongoing support agreements.

Currently, a majority of the revenue stems from consulting fees while a smaller portion is based on the sale of licenses and support agreements. Bublar says it is actively working towards more licensed-based revenues; the fire fighter simulator is

one step in that direction.

Vobling’s latest orders

Year Customer Tech Product 2020 Dafo VR VR Fire Trainer 2020 Aritco 3D and AR Webbased 3D model with AR for sales support 2020 Alfa Laval 3D Model Webbased 3D model for sales support 2020 Int. Retailer XR XR-solution to reduce returns in retail 2019 Royal Swedish Opera XR XR-solution for immersive media 2019 Kalmar (Cargo Tech) AR AR-demonstration tool 2019 Saab VR VR-education tool 2019 Scania XR AR and VR implementation framework 2019 Vy (Norske Statsbaner) VR VR-education tool for fire training 2019 CIMB Bank Philippines AR AR-visualisation tool 2019 SOS Alarm VR VR-demonstration tool 2018 Saab VR VR Carl-Gustaf training simulator 2018 SJ VR VR-education tool, expansion to more types of trains 2018 Air France AR AR-visualisation tool Source: ABG Sundal Collier, company data

Sayduck’s platform is sold as software as a service (SaaS) while the 3D modelling is done on a consulting or project basis. SaaS models have two beneficial characteristics: recurring revenue and high incremental margins. Roughly three quarters of Sayduck’s revenue is SaaS-based today. Sayduck is active in its efforts to recruit large businesses, often through its product information management supplier. Smaller businesses are recruited from their websites with the help of free trials. In general, new customers require some help to implement Sayduck’s product in their ecosystem, generating consulting revenue for Sayduck.

29 June 2020 ABG Sundal Collier 15

Bublar Group

Virtual Brains distributes its games via the Apple App Store or Google Play and is a pure business-to-consumer company. Otherworld Heroes and Hello Kitty AR are free-to-play games with monetisation through in-game transactions, this business model is referred to as freemium. The business model is scalable and the app stores charges a flat fee of 30% of sales. Customer acquisition is an important tool for mobile gaming companies in order to attract new customers, and its execution can be the difference between success and failure. It remains to be seen whether Bublar has the expertise required to navigate through the competitive mobile games market.

Goodbye Kansas Studio’s revenue stems mostly from projects, such as a trailer for a game or VFX work on a TV series. In addition, Goodbye Kansas has a library of concepts for movies, TV and games. If a studio buys the rights for a concept and then produces something based on it, Goodbye Kansas would earn substantial royalties. Today, roughly 40% of revenues comes from gaming companies, other large customers include movie producers and large enterprises. Moreover, Goodbye Kansas has developed a suite of software programs used in within its various businesses that potentially could be licensed to competitors, providing additional revenues streams over time.

29 June 2020 ABG Sundal Collier 16

Bublar Group

Product technology

Bublar is engaged in five more or less integrated technologies that aim to improve productivity & reduce costs, enhance experiences and drive interactions to the next level. The technologies are based on the three in- house platforms: Virtual Training Platform, Visualisation Platform and the Real-World Gaming Platform. The acquisition of Goodbye Kansas Studios broadened the company’s offering outside the platform and introduced VFX and motion capture to the existing product offerings.

Platforms The core of Bublar’s business is based upon an ecosystem of XR technology, containing hardware and software from Apple, Google, HTC, Facebook/Oculus, Unity and Tobii. On this foundation, Bublar created its “XR Super Power Platform” through experience gained from hundreds of projects. The platform is the base for the three platforms: Virtual Training, Visualisation and Real-World Gaming.

3D creation & modelling Turning a physical product into a 3D model is done in one of three ways: Photogrammetry, 3D scanning or 3D modelling from scratch. Use cases differ with the type of objects. A majority of Sayduck’s 3D models are either displayed on websites, where the consumer can twist and turn the product to see it from different angles, or in AR, where a customer can interact with the projected object in the real world. Sayduck also creates more complex models, such as mobile training labs for Rimasys, where both internal and external components have to be modelled.

Goodbye Kansas creates 3D models and artwork for games, movies, trailers etc. These products are not interacted with in the same essence as a Sayduck model. Instead, they are part of a scene in a movie or trailer, or as an object in a game.

Augmented reality (AR) All AR-enabled hardware works in the same way whether it is a head-mounted display or a mobile phone. First, you scan the room with a camera, creating a virtual map that overlays the ordinary world. This is done so the program knows where, for example, the desk, the screen and the floor are. Throughout the process, localisation software keeps track of where the hardware is relative to the surroundings. When the scanning is complete, virtual objects can placed in such a way that it appears as though they are in the room when looking through the screen.

AR is used in Virtual Brains, Vobling and Sayduck’s products, although in different ways. Virtual Brains utilises location-based AR to create a unique form of gaming where you have to explore the real world and what you do in real life affects your in- game avatar. Vobling utilises AR in some of its products, one being augmenting schematics for Ortigas & Company, another to visualise an eye for Memira. Sayduck uses AR to project customers’ 3D models onto the real world, making it possible to see/try them in a mixed reality.

Virtual reality (VR) In VR, the user is fully emerged in the virtual world and does not interact with the real one. It requires a VR headset of some sort, either a dedicated headset or a simpler one that utilizes the phone as the screen. VR is often complimented with a pair of controls so that the user can interact with items in an as real-way as possible.

29 June 2020 ABG Sundal Collier 17

Bublar Group

Vobling is the only business area that utilizes VR technology in its products. Where VR really shines compared to AR is in its ability to take the user from one place to another. For example, Sweden’s largest train operator SJ utilises VR in its training of train personnel. Previous training required staff members and trains to be at the same physical location, leading to downtime for both personnel and trains. In the SJ Virtual Training Simulator, several workers can train at the same time and trains are freed up for operations. SJ’s cost savings and ROI are substantial, according to the company.

Good quality and cheap VR headsets are what have made these services possible and the last decade has seen an tremendous increase in both quality and number of headsets. According to Dubit, the number of VR headsets is expected to hit 200 million in 202020.

Visual effects technology VFX is the process where imagery is created, manipulated or removed outside of the live shoot. Thanks to better graphic processing, digital computer generated images (CGI) look photorealistic, increasing the scope of its applicability. The extra computer power and greater availability, combined with larger TV and movie budgets in general, have led to increased usage, with the technology no longer limited to blockbuster movies. Goodbye Kansas utilises VFX technology in its cinematics, commercials and movie/TV services.

Motion capture Modern motion capture is a relatively new technology that allows for realistic movements of animated people and animals. For example, Goodbye Kansas used motion capture in its cinematics for Cyberpunk 2077. The company utilised motion capture on actors to capture their movement and facial expression while they changed the features of their bodies in VFX. The technology is utilised in most blockbuster movies and AAA-games2122.

20 http://digilitey.eu/wp-content/uploads/2015/09/CVR-Final-PDF-reduced-size.pdf 21 https://www.ign.com/articles/2014/07/11/a-brief-history-of-motion-capture-in-the-movies 22 https://eu.usatoday.com/story/tech/gaming/2019/10/24/call-duty-modern-warfare-video-game-takes- realism-next-level/4021879002/ 29 June 2020 ABG Sundal Collier 18

Bublar Group

Market overview

Bublar is riding on the back of the technological advancement in XR. According to Mordor Intelligence, the global XR market will grow at a 65% CAGR between 2019 and 202523. This growth is fuelled by an expanding scope of applicability and high return on investment for the firms that implement the technology. VFX, artwork and motion capture is growing with the increase in content spending. According to Technavio, the content marketing market will grow at a 13% CAGR24 2019 through 2024.

Enterprise ahead of consumers in the XR race The annual survey by VR-IntelligenceError! Bookmark not defined., where everal industry parties, such as software and hardware companies, content creators, consumers and enterprise end-users, were questioned about the industry outlook, found that the enterprise market is performing better than the consumer market. Consumer VR stood out as especially weak with roughly 50% stating that it was below expectations, compared to 26% for enterprises. According to the study, clear use cases and high ROI are the determining factors for a strong enterprise market, while the consumer market is held back by expensive hardware and limited use cases.

Industry description of the XR-market

60%

50% 49%

40% 41%

30% 29% 30% 27% 28% 28% 26% 26% 27% 20% 18% 18% 20% 15% 11% 10% 9%

0% VR for Enterprise AR/MR for Enterprise VR for Consumer AR/MR for Consumer Very Strong Strong Stable Weaker than hoped

Source: ABG Sundal Collier, VR-Intelligence25

Enterprise XR market There are currently three primary reasons for companies to invest in XR technology: efficiency, quality and safety improvements. The American research company Forrester found three main ways for how this will take shape26:

 Training: Compared to real training, virtual reality allows companies to train their employees in a broader range of scenarios, at a lower cost and in a controlled environment. Today, VR is used to train employees at Walmart in preparation for Black Friday, at SJ when training staff in how to operate their trains and with fire fighters who train with the FLAIM trainer.

23 https://www.mordorintelligence.com/industry-reports/extended-reality-xr-market 24 https://www.businesswire.com/news/home/20200225005433/en/Global-Content-Marketing-Market- 2020-2024-Rising-Number 25 https://s3.amazonaws.com/media.mediapost.com/uploads/VRXindustryreport.pdf 26 https://go.forrester.com/blogs/want-to-launch-a-extended-reality-xr-experience-start-with-employee- scenarios/ 29 June 2020 ABG Sundal Collier 19

Bublar Group

 Remote assistance and instructions: By utilising augmented reality, companies can have a centrally located expert that advises and instructs the technicians, increasing the efficiency of both the expert and the technician. Another use case is instead of having a manual when performing a task, AR can give you the information you need, when you need it and right in front of you, increasing efficiency and reducing errors. Today, Boeing uses AR instead of paper manuals when wiring the planes, reducing the number of errors while improving efficiency by 25%27.  Collaboration and visualisation: By implementing XR, companies can take collaboration to a new level thanks to improved visualising. Making meetings, work processes and communication more immersive. Difficult design processes can be made easier by taking visualisation to another level. The annual VRX Industry28 insight report found that the area where experts intended to work in the coming 12 months were education, AEC and healthcare. Gaming, which has scored high in previous years, was only the sixth most popular field. This survey indicates to some degree which sectors that will experience growth in the coming years. In the same survey, companies that utilised some type of XR-technology today were asked in what type of projects they used it. Fields where visualisation is of great importance, and traditional methods are expensive or complicated, see the highest utilisation of VR. In most use cases, VR is almost twice as common as AR/MR.

Busiest sectors coming 12 months Most common areas of XR implementation 96% 93% Education 56% 100% 90% 90% 90% 84% 81% AEC 44% 80% 70% 57% Healthcare 42% 55% 51% 60% 46% 48% 51% Manufacturing 40% 50% 40% Automotive 36% 30% Gaming 33% 20% 10% Film/Tv/Broadcast 31% 0% Travel & Tourism 29% Retail 28% Sports 16% Banking & Finance 12% Other 21%

0% 10% 20% 30% 40% 50% 60% Which of these industries do you intend to work in over the next 12 months VR AR/MR

Source: ABG Sundal Collier, VR-Intelligence Source: ABG Sundal Collier, VR-Intelligence

E-commerce market The global e-commerce market is estimated to reach USD 6.5tr in 202329, growing at a 16.6% CAGR between 2019 and 2023. Growth is driven by the shift from traditional brick-and-mortar retailing to e-commerce. As of 2019, 14.1% of sales stems from online; by 2023, more than one fifth, 22%, of revenue is expected to come from online30.

27 https://go.forrester.com/blogs/want-to-launch-a-extended-reality-xr-experience-start-with-employee- scenarios/ 28 https://s3.amazonaws.com/media.mediapost.com/uploads/VRXindustryreport.pdf 29 https://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/ 30 https://www.oberlo.com/statistics/global-ecommerce-sales 29 June 2020 ABG Sundal Collier 20

Bublar Group

Global E-Commerce Market 8,000

7,000 +16.6% 6,542

6,000 5,695 4,927 5,000 4,206 4,000 +21.5% 3,535 2,982 3,000 2,382 1,845 2,000 1,548 1,336 1,000

0 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e 2023e Sales in billion USD per year

Source: ABG Sundal Collier, Statista

European E-Commerce Market The Swedish and Danish postal service, PostNord, revealed in its 2019 E- Commerce report that Western Europe (see map below for specific countries) contained 286 million online shoppers that spent a total of EUR 235bn in 201931. Germany is the largest market in terms of total revenue, closely followed by the UK. The most common segment is Clothing & Footwear, followed by Home Electronics and Books/Audiobooks. Bublar talks about clothing and home furnishings as it largest segments for Sayduck. Cosmetics is another area where AR has affected the way customers interact with products before purchase. The amount of people that buy items online on their mobile phones has more than doubled between 2014 and 2019, which is opening up for Sayduck’s AR solutions.

Total- and per-person consumption by country Number of online consumers by segment 180 167 60 1000 160 900 140 50 52 121 800 120 106 47 EUR PerPerson 40 100 90 700 72 38 80 61 62 61 61 67 30 600 59 32 60 52 500 20 25 40 400 17 20

Total Consumption in EUR in B Consumption Total 10 13 300 0 8 4 0 200

Total Consumption in B EUR EUR Per Person

Source: ABG Sundal Collier, PostNord Source: ABG Sundal Collier, PostNord

Germany has the largest amount of online shoppers, followed by the UK and France. These markets considered mature while markets such as Italy, Spain and Poland are driving growth, partly by increasing average spending but primarily from attracting more people to online shopping.

31 https://www.postnord.com/contentassets/f1c34a0cd6b04ff591b2199de13f3986/e- handel_europamaster_0910-en_us_final.pdf 29 June 2020 ABG Sundal Collier 21

Bublar Group

E-commerce customers per country (millions)

Source: ABG Sundal Collier, PostNord

Mobile gaming market The global gaming market is estimated to generate USD 152.1bn in revenue during 2019. The mobile gaming market is the largest and fastest growing platform within gaming, constituting roughly 45% of the market and 55% of the expected growth from 2019 to 202232. Growth is driven predominately by emerging markets and the growing number of smartphones.

China is the main market for mobile gaming, generating USD 28bn in revenue, followed by the USA and Japan – generating approximately USD 14bn each. The three countries lead the market, generating 80% of global revenues33. Other large markets are South Korea, Germany and the United Kingdom while India is the market with the highest number of new installs.

Apple’s App Store and Google Play have monopolised the market for downloading games to mobile units. In 2018, more than 1.6 million games were released on Google Play and 1.1 million on the Apple App Store34. Google Play also leads the number of games downloaded, with 72% compared to Apple’s 28%. However, Apple’s customers are higher spenders and contribute 64% of dollars spent.

The competition for players’ attention is fierce, and with millions of games to choose from, it is difficult to break through the noise and stand out. Data from App Annie show that just over a thousand games are able to generate more than USD 5m in revenue.

32 https://newzoo.com/insights/articles/the-global-games-market-will-generate-152-1-billion-in-2019-as- the-u-s-overtakes-china-as-the-biggest-market/ 33 https://www.appannie.com/en/insights/mobile-gaming/the-state-of-mobile-games-in-2019-and-beyond/ 34 https://venturebeat.com/2019/06/12/app-annie-games-were-one-third-of-all-mobile-downloads-in-2018/ 29 June 2020 ABG Sundal Collier 22

Bublar Group

Games generating more than USD 5m

2019 372 283 183 143 140

2018 359 266 171 143 116

2017 339 236 173 123 88

0 200 400 600 800 1000 1200 >$5M >$10M >$20M >$40M >$100M

Source: ABG Sundal Collier, AppAnnie35

Player behaviour Casual gaming is top in terms of number of downloads, 82%, while more hardcore games account for 55% of time played and 76% of revenue. The casual games genre is dominated by Arcade and Puzzle games while hardcore games predominantly consist of Action and Shooter games. RPG games account for almost 40% of gaming revenue, twice as much as any other type of game. The data show that there is a small portion of players that play a lot, and spends even more, compared to the average player.

Breakdown of player behaviour 90% 82% 80% 76%

70%

60% 55%

50% 44% 40%

30% 18% 18% 20%

10%

0% Share Downloads Time Spent Playing Share of Revenue Core Games Casual Games

Source: ABG Sundal Collier, company data

A study performed in 2017 by Newzoo found that 46% of gamers were women. Gaming was most equal on mobile, where 52% of gamers are men compared to 48% of women. Mobile gaming also has the majority of players aged 25 or above.

35 https://www.appannie.com/en/go/state-of-mobile-2020/ 29 June 2020 ABG Sundal Collier 23

Bublar Group

Location and AR-based gaming Within mobile AR- and location-based gaming there is a before and after Pokémon GO. According to Newzoo, Pokémon GO accrued more than 550 million installs and USD 470m in revenue within its first 80 days36. Since then many brands have tried related games without achieving the same success as Niantic with Pokémon GO. Not even its own highly anticipated Harry Potter game, Wizard Unite, could live up to the studio’s predecessor.

The large mobile AR games have all utilised established, well-known IPs to promote their games; Pokémon, Harry Potter, Jurassic World, Ghost Busters and The Walking Dead are examples of IPs that have been the base for AR games. Minecraft Earth is one of the first major titles for AR that utilises a purely game- based IP. The Hello Kitty brand is likely going to help Bublar break through the noise and attract some attention for its game.

VFX, motion capture and artwork The large fields of VFX, artwork and motion capture spreads over several markets and use cases. VFX is used in movies and TV, commercials, gaming and YouTube videos. Artwork is a part of all these markets, from creating the Lion King to a model in a mobile game. Motion capture started as a way to create smooth animated movies. Since then, motion capture has expanded from movies to physical therapy, sports and gaming.

The global VFX market generated USD 26.62bn in 2019. The market research firm EMR estimates a CAGR of 11% from 2020 through 2025, with Hollywood and large streaming services such as Netflix, Amazon Prime Video and Hulu driving the demand for high quality visual effects.

The United States dominates the market today but developing countries such as China and India, which have large domestic movie industries, are experience strong growth.

Global VFX market (USDbn)

50 50 45 40 40 36 33 30 30 27

0 2019 2020e 2021e 2022e 2023e 2024e 2025e Market Value in USD Billion

Source: ABG Sundal Collier, EMR37

The market for 3D motion capture was estimated to be worth USD 141.7m in 2018, and Verified Market Research38 estimates a CAGR of 10.1% between 2019 and 2026. The market can be segmented into hardware, software and service, where Goodbye Kansas is active within the latter.

36 https://newzoo.com/insights/articles/analysis-pokemon-go/ 37 https://www.expertmarketresearch.com/reports/visual-effects-market 38 https://www.verifiedmarketresearch.com/product/global-3d-motion-capture-market-size-and-forecast- to-2025/ 29 June 2020 ABG Sundal Collier 24

Bublar Group

Market drivers and trends

Mobile AR AR and VR are still in their infancy and the scope of their applicability is growing at a rapid pace, as technological expertise grows each year. With maturing technology, the number of processes that benefit from XR will increase. The number of people working with AR is steadily increasing. The largest developing platforms today are Apple’s ARKit and Google’s ARCore; together, they have more than 150 million monthly active users according to Mobidev.

Installed base and monthly active users (in millions) 1200

1000

800 650 600

400

433 200 400 150 0 44 47.7 Devices MAU Devices MAU December 2017 May 2019 ARCore ARKit Monthly Active Users

Source: ABG Sundal Collier, Mobidev39

Qualcomm, the leading developer of processing units for XR headsets, compares the state of XR hardware to the mobile telephone during the 1990s and believes that during the next decade we will see the same rapid progress that occurred for the mobile phone. Qualcomm lists some major areas where the technology must advance in order for mobile XR to become a reality. They are:

 Screens need to improve in some major areas: field of view, colour quality, refresh rate, brighter, cheaper, higher resolution and the capability to go from opaque to transparent instantaneously.  Improved projection of objects to make them look lifelike, capturing and reflecting the light in a natural way.  Motion traction to enable the wearer to interact with the goggles and the extended reality with hands, eyes and body.  Battery and thermals that enable full-day use and can be recharged for at least 1,000 cycles, increase battery storage capacity per gram by a factor of five in 10 years, double the performance/watt every 3 years and reduce heat generation.  Connectivity is part of the solution for the performance and battery life problem, as well as making the glasses/goggles light and comfortable. The 5G network and cloud computing could enable low latency, 120 HZ 8K HDR video to be streamed directly to the wearer, reducing the computing requirements on the device itself.

39 https://mobidev.biz/blog/augmented-reality-future-trends-2018-2020 29 June 2020 ABG Sundal Collier 25

Bublar Group

XR in the work environment We are not at the stage where true mobile XR will be a reality for a long time. Until then, VR headsets from Oculus, HTC and Sony, AR technology for mobile phones together with glasses and headsets will drive the market growth.

Although a relatively young technology, VR-Intelligence’s survey indicates the positive impact XR has on businesses40. Over 90% of firms that have implemented VR reported a positive impact, slightly more than AR. This is promising, as it will drive more investments in the technology.

“How would you describe the impact of XR on “Does your firm expect investing in XR in the your business?” medium term?” 70% 70% 66%

60% 57% 60%

50% 44% 44% 50%

40% 36% 40%

30% 30% 23% 20% 20% 12% 7% 10% 10% 10% 1% 0% 0% VR AR/MR VR AR/MR VR AR/MR Yes, definitely Yes, wer are testing its Maybe, we're Unlikely Very positive impact Some positive impact No significant impact effectiveness considering

Source: ABG Sundal Collier, VR-Intelligence Source: ABG Sundal Collier, VR-Intelligence

Improvements in head-mounted displays (HMDs) during the last couple of years have enabled software developers and companies to develop programs with more functions. Microsoft’s HoloLense 2, for example, allows the wearer to leverage Microsoft Azure41 and the cloud, expanding the use cases and propelling further growth. Shift to E-commerce In a report from 2017, PWC asked 18,430 consumers for their motives behind shopping online. More than 50% stated either the ability to shop 24/7 and/or ability to compare prices as the most important factors for shopping online. Other major factors were online sales or relatively cheaper prices compared to brick-and-mortar retailers, they save time or the convenience of not having to go to the shop. Convenience and savings ─ major drivers for online-shopping

Ability to shop 24/7 58% Ability to compare prices 54% Online sale/better prices 46% Save time 40% Convenience of not going to shops 39% Greater variety/selection 29% Free shipping offers 29% Convenience of all-in one place 27% Locate hard to find items 20% Avoid crowds 15% Product availability 15% No checkout lines 11%

0% 10% 20% 30% 40% 50% 60% 70%

Source: ABG Sundal Collier, KPMG42

40 https://s3.amazonaws.com/media.mediapost.com/uploads/VRXindustryreport.pdf 41 https://news.microsoft.com/innovation-stories/hololens-2-shipping-to-customers/ 42 https://assets.kpmg/content/dam/kpmg/xx/pdf/2017/01/the-truth-about-online-consumers.pdf 29 June 2020 ABG Sundal Collier 26

Bublar Group

Convenience is the number one reason that people shop online. As the digitalisation continues and more people obtain access to the internet and smartphones, the number of customers that can purchase items online increases. In China, India and Singapore, consumers stated that avoiding crowds were a major motivator to shop online and to avoid the crowded public areas43.

In Amazon’s fourth quarter presentation, Jeff Bezos announced that Amazon had surpassed 150 million Prime members around the world. The Prime membership offers free two-day delivers and other free shipping options to their customers. By showing companies what is possible, and making customers expect nothing other than fast, free shipping, Amazon has paved the way for online shopping like no other company. Customers today expect fast, easy and frictionless shopping. In addition, with the advent of AI and increased capacity in last mile shipping, shopping online is becoming more convenient by the day.

In the same KPMG study, respondents listed the ability to touch, see and try on the items as the chief reason for shopping in a physical store. These areas are within the scope of Sayduck’s product offering to address. New technologies will allow customers to view an object in 3D, with better colour and light reproduction than before, thanks to improvements in ray tracing. Advancements within AR allow customers to try on glasses, bow ties or even makeup before purchasing. IKEA is investing heavily in AR44 to allow customers to display IKEA’s catalogue of products in their home, erasing the barriers between online and retail while reducing the risk of returns due to unsatisfied customers. KPMG estimates that by overcoming consumer hurdles, e-commerce will continue to take market share from traditional retailers, thus fuelling growth for many years to come.

Seeing and trying, hurdles online e-commerce have to solve I want to see/touch item first 56% I want to try the item on 55% Concerned products look different 41% Delivery takes too long 34% Shipping costs too high 25% Product is too valuable to buy online 24% Enjoy the experience of shopping 23% I have to shop anyway 16% I want to verify the authenticity 15% Return process is too complicated 14% Do not trust online security 13% Talk to a sales person 11% 0% 10% 20% 30% 40% 50% 60%

Source: ABG Sundal Collier, KPMG45

43 https://assets.kpmg/content/dam/kpmg/xx/pdf/2017/01/the-truth-about-online-consumers.pdf 44 https://techcrunch.com/2020/04/02/ikea-acquires-ai-imaging-startup-geomagical-labs-to-supercharge- room-visualisations/ 45 https://assets.kpmg/content/dam/kpmg/xx/pdf/2017/01/the-truth-about-online-consumers.pdf 29 June 2020 ABG Sundal Collier 27

Bublar Group

Mobile Gaming The predominant part of mobile gaming is done on a smartphone, making smartphone sales, and penetration, important for continued growth in the mobile gaming segment. The number of sold smartphones grew quickly in late 2000s and early 2010 but has since hit a plateau of c.1.5 billion units per year. Because of extended longevity for smartphones,46 penetration has grown from 34% in 2014 to 38% in 2018 and it is expected to continue to grow into the 2020s.

Annual smartphones sold and global smartphone penetration

1800 50% 1561 1556 1518 45% 1600 1496 1537 1424 1400 40% 1245 35% 1200 970 30% 1000 25% 800 680 20% 600 472 15%

400 297 10% 139 172 200 122 5%

0 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e2020e Number of smartphones Sold (million) Global smartphone penetration

Source: ABG Sundal Collier, Statista4748

As the number of smartphones continue to grow, particularly in less mature markets, more people will find themselves playing mobile games as their first source of digital gaming. This is also true for younger and new generations that start their gaming career on mobile devices such as the smartphone or tablets.

The mobile platform is especially suited for casual, and hyper-casual games, with the latter category generating a 150% increase in downloads during 2019 compared to 2018 according to AppsFlyer49. These categories are well suited to be free-to- play (F2P) games that monetise through in-game advertising and purchases.

There are hundreds of thousands of games available on Google Play and the Apple App Store; most of them are F2P and then monetised through in-game. On one hand, F2P lowers the monetary barrier, making it easier for customers to start playing. On the other hand, there is no monetary commitment, as the customer do not have to make an initial investment, which in turn leads to less loyal gamers. Companies therefore use customer acquisitions tools (marketing) to attain and retain customers to a higher degree in a F2P game in general, and in mobile games in particular, compared to traditional pay-and-play models on a console or PC.

There are several ways for companies to attract new players for their games. A new studio without a following or a well-established game likely has to turn to ads: banners, video, or running a social media campaign. Once a player base is established, it can be leveraged in order to attain new players via referral programs, and even start growing organically by word of mouth. After players are acquired, the struggle to keep them playing – and paying – starts. New content or events, mobile

46 https://www.cnbc.com/2019/05/17/smartphone-users-are-waiting-longer-before-upgrading-heres- why.html 47 https://www.statista.com/statistics/203734/global-smartphone-penetration-per-capita-since-2005/ 48 https://www.statista.com/statistics/263437/global-smartphone-sales-to-end-users-since-2007/ 49 https://indvstrvs.com/casual-games-drives-mobiles-biggest-growth/ 29 June 2020 ABG Sundal Collier 28

Bublar Group

retargeting, emails and social media activity are levers that can be pulled in order to get players to come back (cheaper than traditional marketing). Marketing campaigns not only benefit the individual advertising company, but they benefit the entire industry by pulling in new gamers and retaining current players.

Mobile gaming growth drivers 1. Net increase of smartphone users increases the pool of potential gamers. 2. Customer acquisition efforts increases Gaming the number of gamers and make Companies existing gamers play/spend more. 3. Revenue is used for continuous Customer customer acquisition. Acquisition 3 4. Rinse and repeat 2 2 Revenue

Net new number of 1 Number of Player Base smartphones smartphone users

New Gamers

Source: ABG Sundal Collier, company data

VFX, motion capture and animations According to Zion Market Research, the VFX market was estimated at USD 8.6bn in 2017 and is expected to grow by 12.8% CAGR, reaching USD 20.0bn in 202450. Growth within VFX, motion capture and artwork is driven by larger original content spending in the movie & TV industry. Original content spending (including sports) has grown from USD 100bn in 2008 to USD 165bn in 2018, with USD 50bn of the USD 65bn increase occurring in 2014-201851.

The increase in content spending is driven by a battle for eyeballs. Historically, traditional media companies such as Disney, Comcast and ViacomCBS have been the largest content spenders, but as streaming wars have ramped up, new competitors have joined Netflix and adopted its business subscription-based business model. Amazon and Apple have launched their own streaming services and studios in which they invest heavily while FaceBook and YouTube are looking to compete for viewers’ attention. Companies like Goodbye Kansas will ride on the increased spending track as long as the streaming wars continue.

Advancement in computing power and improvements in usability have led to an expanded scope of applicability. VFX, motion capture and animations are no longer limited to the big screen. Shows like Game of Thrones, Stranger Things and Star Trek are relying on studios like Good Bye Kansas to create visually appealing shows52 in ways that were unthinkable 10 years ago.

50 https://www.globenewswire.com/news-release/2018/09/27/1577156/0/en/Global-VFX-Market-Will- Reach-USD-19-985-64-Million-By-2024-Zion-Market-Research.html 51 https://www.tvtechnology.com/news/tv-content-spending-increased-50b-over-last-five-years 52 https://www.vfxvoice.com/vfx-explosion-brings-new-excitement-to-tv-with-demands-and-rewards-for- pros/ 29 June 2020 ABG Sundal Collier 29

Bublar Group

Original content spending estimates 2019 (USDbn)

30 27.8

20 15.4 14.2 15 15 15

10 5.7 6 6.5 4.6 5 2.3 2.5 2.7 0.8 0.9 1.1 0

Source: ABG Sundal Collier, Variety53

The gaming industry depends on animations and motion capture to make games look realistic. In addition, the growing number of games released each year makes trailers and cinematics more important than ever in order to stand out. The gaming market is expected to grow by 9% between 2018 and 2022, according to Newzoo54.

Number of games released on Steam worldwide Global games market (USDbn) 10000 9050 250.0 9000 8290 8000 7049 200.0 7000 37.2 6000 35.6 2.0 150.0 34.6 1.8 31.9 5000 3.3 60.8 4207 30.5 3.0 55.2 4.2 4000 100.0 51.0 2964 48.7 15.7 43.0 14.3 3000 13.2 13.7 1771 50.0 12.5 2000 80.4 62.5 71.3 48.5 54.8 565 1000 356 276 283 379 7 6 71 112 183 0.0 0 2018 2019e 2020e 2021e 2022e 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Smartphone Tablet Console Browser PC Boxed/Downloaded PC

Source: ABG Sundal Collier, Statista55 Source: ABG Sundal Collier, Newzoo56

53 https://variety.com/2020/biz/news/2019-original-content-spend-121-billion-1203457940/ 54 https://newzoo.com/insights/articles/the-global-games-market-will-generate-152-1-billion-in-2019-as- the-u-s-overtakes-china-as-the-biggest-market/ 55 https://www.statista.com/statistics/552623/number-games-released-steam/ 56 https://newzoo.com/insights/articles/the-global-games-market-will-generate-152-1-billion-in-2019-as- the-u-s-overtakes-china-as-the-biggest-market/ 29 June 2020 ABG Sundal Collier 30

Bublar Group

Competitive landscape

Bublar Group faces competition via its different subsidiaries, Vobling, Sayduck, Virtual Brains and Goodbye Kansas Studio.

Vobling The market for creating XR applications is fragmented and more than 50% of all companies that implement XR technologies today say that they utilised in-house development to a large extent57. In addition, Vobling faces competition from low-cost countries such as Manila especially for the development of AR applications58, with affiliate sites that match customers with developers. Vobling has however established its own site in Manila, where approximately 20 employees are located.

How companies implement XR technologies

All is outsourced 13%

All is built in- house Most is outsourced 36% 15%

Evenly split 18% Most is built in- house 18%

Source: ABG Sundal Collier, VR Intelligence

As the market is still in its infancy, determining the market structure for when the market is mature is all but impossible. Several mid-sized companies offer the same type of services that Vobling does today: the German company RE’FLEKT has a platform that enables companies to use AR on several platforms, such as HoloLense, Android, iOS and Widows. The Polish developer Pixel Legend, develops remote tools for collaboration and digital solutions for cultural sites59. Strivr developed Wallmart’s VR training program that prepares employees for the Black Friday rush and has worked with companies such as Verizon and JetBlue60.

The acquisition of Goodbye Kansas Studios enables Vobling to take the visuals and graphics in its VR solutions to the next level. Having a studio that frequently makes VFX and animations for the largest movie and gaming studios in the world is an advantage in applications were graphical requirements are high.

57 https://s3.amazonaws.com/media.mediapost.com/uploads/VRXindustryreport.pdf 58 https://www.appfutura.com/augmented-reality-developers?p=1&filter_order=ranking/ 59 https://www.pixellegend.com/en/ 60 https://www.strivr.com/ 29 June 2020 ABG Sundal Collier 31

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Sayduck Several competitors offer products and services similar to Sayduck. Capassity offers a platform and 3D modelling as well as VR- and AR-enabled viewing. The firm has worked with, among others, Samsonite to display its bags in 360 degrees and in AR61. Webrotate360 is another competitor that offers 3D and 360 degrees of viewing by photographing items62. The competition for larger and more advanced models is not as fierce as the market for 3D rendering for surfaces. Vertical competition from the companies that own the customers is light, as most e- commerce uses consulting services for their product information management. However, it is likely that the PIM (personal information manager) will integrate an option to view and display 3D and AR products in their own solution, rather than layering Sayduck’s platform on their current product.

Virtual Brains The mobile gaming market is highly competitive with more than one million games released in 201863. The closest listed peers in the Nordics are G5 Entertainment, Mag Interactive, Rovio Entertainment and Beyond Frames. However, Otherworld Heroes is the first and only game that combines location-based gaming in a MMORPG game, something that may help them it gain some initial visibility and traction.

Hello Kitty AR: Kawaii World is a combination of Tamagotchi and Animal Crossing with an AR touch. The game is one of the first AR games that is aimed more towards a female audience, and given how well-known the brand is, it should give the company a good chance of generating visibility and traction.

Goodbye Kansas Studios There are several large VFX companies in Europe with larger portfolios than Goodbye Kansas. Moving Picture Company is one of the leading studios in Europe for commercials, with customers such as Nike, Audi, McDonald’s and TAG Heuer64. DNEG is one of the largest VFX studies in the world, and Europe’s leading studio, with anticipated blockbuster movies such as Tenet, Dune and Wonder Woman 1984 in production65.

Goodbye Kansas’ motion capture studio faces tough competition from several European studios. Audiomotion captures the largest volumes in Europe and has done work on Star Wars: The Last Jedi, Forza Horizon 4 and Ready Player One66. Centroid and Gigicmotion are two other competitors that offers motion capture in Europe.

The risk of vertical competition is slim due to the way the movie and gaming industries work. In the movie and TV industries, two players carry most of the power: distributors and production companies. Larger firms often have both a distribution division and one, or several, production divisions. For example, Disney has a distribution unit that distributes content for its Marvel, Lucasfilm and Pixar studios e.g.

The norm in the business is not to have an in-house VFX or motion capture studio as the majority of their work is done during a limited part of the production67.

61 https://cappasity.com/ 62 https://www.webrotate360.com/ 63 https://venturebeat.com/2019/06/12/app-annie-games-were-one-third-of-all-mobile-downloads-in-2018/ 64 https://www.moving-picture.com/our-work/visual-effects/#watch-postmates-when-all-you-can-burgers- is-think-about 65 https://www.dneg.com/film-vfx/ 66 http://www.audiomotion.com/about/ 67 https://variety.com/2018/artisans/production/vfx-summer-box-office-1202824543/ 29 June 2020 ABG Sundal Collier 32

Bublar Group

Retaining the capability that is needed during the peak of the project would be too expensive, therefore it makes economic sense to hire external studios on a project basis. The same is true for most gaming companies, some larger ones, such as Blizzard Entertainment which has its own cinematic teams68, but smaller studios cannot afford a dedicated team and use companies such as Goodbye Kansas Studios to create their trailers.

68 http://www.behindthecinematic.com/people/jeff-chamberlain/ 29 June 2020 ABG Sundal Collier 33

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Estimates and forecasts

At its core, Bublar seeks to offer cutting-edge expertise and technology in the XR market, through organic initiatives like R&D as well as acquisitions. Through new and innovative XR solutions, Bublar seeks to offer solutions that improve efficiency, productivity and the experience related to production, training and sales. Below we highlight what we think will drive revenue organically in Bublar’s different segments; however, we also believe that Bublar will continue its M&A- driven growth strategy within the XR space, as long as financing is readily available, and target prices remain favourable.

Revenue Bublar has not communicated any financial targets, but we have been able to extract some forecasts from its reports to develop our assumptions:

 Virtual Brains’ financial development is very dependent on the success of the recently released Otherworld Heroes, and the upcoming Hello Kitty AR: Kawaii World. If successful, we believe that Virtual Brains will be able to leverage its unique platform for location-based AR games, further driving growth.

 We believe that Sayduck is set to continue to grow, driven by large projects and pipeline of requests for its scalable platform. We see an increasing demand for AR and 3D viewing of items on e-commerce platforms, driven by the continued growth of e-commerce and users who are adapting to the technology.

 For Vobling, we expect growth to be driven by 1) increased sales efforts and 2) leveraging the existing products and platforms, such as the VR Fire Trainer, for which Bublar entered into a strategic partnership with reseller Dafo69 in order to deliver an easy-to-use, off-the-shelf solution.

 Goodbye Kansas Studios has undergone a challenging restructuring during the last few years, and now seems to be able to reap the benefits. The company has an attractive offering, with one of the largest and most modern motion capture studios in Europe. This represents an attractive alternative for European gaming companies, as they can avoid expensive studio time and travel costs by using a motion capture studio in Stockholm instead of Los Angeles. Furthermore, the company is looking to move away from a lumpy work-for-hire business model, towards a steadier stream of revenue generated through framework agreements with its customers, while also packaging its proprietary motion capture software and digital assets into a licensing package. In addition, it is worth reiterating that Bublar is currently riding on the back of structural trends such as the adoption of XR technology in sales, gaming, e- commerce and at-work training. The global XR market is expected to grow by a CAGR of ~65% between 2019 and 202570, and although we are a bit more conservative in our revenue growth estimates during our forecast period, Bublar is still in an early phase in terms of product commercialisation and packaging, even if the technology is in place.

69 https://www.di.se/pressreleaser/2020/6/11/bublar-group-ab-publ-bublar-group-i-strategiskt- partnerskap-med-dafo-for-brandsakerhetstraning-i/ 70 https://www.mordorintelligence.com/industry-reports/extended-reality-xr-market 29 June 2020 ABG Sundal Collier 34

Bublar Group

Operational costs Bublar’s operational costs are divided into Other External Expenses and Personnel Expenses; the majority of both are attributable to the development of Bublar’s AR gaming platform, and especially its two new mobile games, Otherworld Heroes and Hello Kitty AR: Kawaii World. Costs associated with the development of both games are realised fully on the P&L rather than incurring balance sheet risk by activating the work. As both titles are quite large and ambitious games, the cost incurred are high, compared to Bublar’s sales. In 2019, costs approximated SEK 21m, or rather ~123% of net sales were attributable to the development of the two games and the Virtual Brains gaming platform.

Otherworld Heroes was soft launched in Sweden, Poland and Indonesia on 7 May, and we expect a global release later in 2020. Furthermore, we estimate that Hello Kitty AR: Kawaii World will be released during Q3’20. As such, both product are nearly finished. However, although certain development costs will decline following the release, Bublar will still need to create new content and spend capital on User Acquisition for the games to gain traction. Forecast operational costs are tricky given the imminent inclusion of a large new subsidiary in Goodbye Kansas Studios; however, we forecast that operational costs will decline from 116.3% in ’20e to 94.4% in ’22e due to the scalability of Bublar’s business model.

Depreciation and amortisation Bublar’s depreciation and amortisation mainly relate to the company’s intangible assets: goodwill and capitalised development expenses. Bublar prepares its accounts in accordance with K3, and as such has to amortise its goodwill on a straight-line basis, as opposed to an IFRS annual impairment test. Bublar has an M&A-driven growth strategy, thus a sizeable goodwill position has been created – approximately SEK 50m by Q1’20, amortised over five years. Amortisations related to goodwill amounted SEK 3.2m in Q1’20. Bublar’s capitalised development expense on its balance sheet amounted to ~SEK 10m in Q1’20, which were mainly incurred in conjunction with the development of Bublar’s software platform and amortised over five years. Amortisations related to capitalised development expense amounted to SEK 0.8m in Q1’20. We note that the cost of developing Bublar’s new mobile games within Virtual Brains has not been activated, but instead fully charged to the P&L.

We highlight our estimate that the acquisition of Goodbye Kansas Studios will add a sizeable amount of goodwill, in our forecast we add approximately SEK 80m in goodwill, which would yield additional quarterly amortisations of SEK 4m. We note that these are ABGSC projections, as the PPA is not finalised as of yet.

Profitability We prefer to measure Bublar’s profitability in terms of EBITDA, given that the K3 accounting standard along with the resulting amortisations on goodwill create considerable negative pressure on EBIT given Bublar’s M&A strategy. Profitability will very much depend on the turnaround of Goodbye Kansas Studios’ financials, by moving away from a strictly work-for-hire model and entering longer framework agreements with key customers, and also by packaging and licensing its digital assets. The success of Virtual Brains’ new games will also be key in driving Bublar’s profitability. Ultimately, we forecast that Bublar will reach positive EBITDA of SEK 12m in ’21e, for a margin of 4.0%, which expands to SEK 24m in ’22e, for a margin of 7.0%. We highlight that we have opted to be very conservative in our revenue estimates for Virtual Brains.

29 June 2020 ABG Sundal Collier 35

Bublar Group

Quarterly Operational Costs, (SEKm) Annual Operational Costs, (SEKm) 70.0 350 63 311 60.0 282 53 300

50.0 250 38 40.0 200 167 30.0 150 20.0 15 13 14 10 11 11 100 7 10.0 5 5 5 3 4 4 50 50 20 24 0.0 0 2017 2018 2019 2020e 2021e 2022e Other External Expenses Personnel Expenses Other External Expenses Personnel Expenses

Source: ABG Sundal Collier, company data Source: ABG Sundal Collier, company data

Quarterly D&A, (SEKm) Annual D&A, (SEKm) 9.0 8 8 35 8.0 30 30 7 30 7.0 27

6.0 25 5.0 4 4 4 20 4.0 3 3 15 3 15 3.0

2.0 10 5 0 1 1 1 1.0 5 0 0.0 0 2017 2018 2019 2020e 2021e 2022e Goodwill Capitalised Development Expenses

Goodwill Capitalised Development Expenses

Source: ABG Sundal Collier, company data Source: ABG Sundal Collier, company data

Quarterly Net Sales & EBITDA, (SEKm) Annual Net Sales & EBITDA, (SEKm) 70.0 0.0% 350 330 10% 58 60.0 300 289 -2.0% 5% 50.0 47 250

40.0 35 -4.0% 200 0% 30.0 144 -6.0% 150 20.0 -5% 100 10.0 5 -8.0% 3 5 3 4 5 50 23 0.0 17 12 -10% -10.0% 0 3 -10.0 0 2017 2018 2019 2020e 2021e 2022e -13 -20 -20.0 -12.0% -50 -31 -18 -15% Net sales EBITDA EBITDA margin Net sales EBITDA EBITDA margin

Source: ABG Sundal Collier, company data Source: ABG Sundal Collier, company data

29 June 2020 ABG Sundal Collier 36

Bublar Group

Quarterly estimates overview

Quarterly overview, Q1’17-Q4’20e, (SEKm)

Quarterly overview (SEKm) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20e Q3'20e Q4'20e Work - Vobling 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.0 4.7 3.2 3.0 4.4 3.9 3.6 4.0 5.7 Shop - Sayduck 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.1 0.8 0.7 1.3 1.6 1.4 Play - Virtual Brains 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 1.0 1.0 Goodbye Kansas Studio 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 29.7 40.0 50.0 Net Sales 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.1 4.7 3.2 4.1 5.2 4.6 34.7 46.5 58.1

Capitalised production costs 2.6 4.2 2.2 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 1.2 1.4 1.0 1.0 Other operating income 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.3 0.1 0.2 0.2 0.0 0.4 0.0 0.0 0.0 Total operating income 2.6 4.2 2.2 0.3 0.3 0.1 0.1 3.5 4.8 3.4 4.2 6.2 6.3 36.1 47.5 59.1

Opex -5.5 -7.5 -2.7 -4.2 -5.0 -4.9 -3.7 -10.3 -10.9 -12.6 -11.2 -15.1 -13.5 -38.4 -52.7 -62.8 Of w hich Other external expenses -1.4 -2.7 0.6 -1.5 -1.1 -1.5 -0.9 -4.6 -4.1 -5.4 -4.4 -7.6 -6.3 -17.3 -23.7 -28.3 Personnel expenses -4.1 -4.7 -3.2 -2.7 -3.9 -3.4 -2.8 -5.7 -6.8 -7.1 -6.7 -7.5 -7.2 -21.1 -29.0 -34.6 Other operating income/expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

EBITDA -2.9 -3.2 -0.5 -3.9 -4.6 -4.8 -3.6 -6.9 -6.0 -9.2 -7.0 -8.9 -7.2 -2.3 -5.2 -3.8

D&A 0.0 0.0 0.0 -0.5 -0.7 -0.7 -0.7 -2.8 -3.2 -3.2 -4.1 -4.1 -4.1 -6.6 -8.0 -8.0

EBIT -2.9 -3.3 -0.5 -4.4 -5.3 -5.5 -4.2 -9.7 -9.2 -12.4 -11.1 -13.0 -11.3 -8.9 -13.2 -11.8

Non-recurring items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net financials 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

EBT -3.0 -3.3 -0.5 -4.4 -5.4 -5.5 -4.3 -9.7 -9.2 -12.4 -11.1 -13.0 -11.3 -8.9 -13.2 -11.8

Taxes 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.3 0.0 0.0 0.0 -0.1 0.0 0.0 0.0 0.0 Tax rate 0.0% 0.0% 0.0% 0.8% 0.0% 0.0% 0.0% 2.7% 0.0% 0.0% 0.0% 0.4% 0.0% 0.0% 0.0% 0.0%

Net profit -2.3 -2.6 -0.4 -2.6 -5.4 -5.5 -4.3 -10.0 -9.2 -12.4 -15.8 -13.0 -11.3 -8.9 -13.2 -11.8

EPS Basic (SEK) -0.18 -0.18 -0.02 -0.10 -0.21 -0.22 -0.15 -0.28 -0.22 -0.30 -0.39 -0.25 -0.21 0.00 0.00 0.00 EPS Diluted (SEK) -0.18 -0.16 -0.02 -0.09 -0.18 -0.19 -0.13 -0.27 -0.22 -0.28 -0.35 -0.24 -0.19 -0.10 -0.14 -0.12 Growth Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20e Q3'20e Q4'20e Sales y-o-y 1516.2% 8661.1% 15808.0% 68.7% -0.4% 999.4% 1070.2% 1003.3% Sales organic y-o-y 46.2% -28.1% 7.5% 64.4% 53.5% EBITDA y-o-y -76.2% -6.2% 60.5% 47.3% 660.6% 75.1% 29.6% 92.7% 97.8% 28.5% 20.2% -74.8% -26.6% -57.5% EBIT y-o-y -74.3% 4.0% 82.3% 66.7% 733.8% 120.4% 73.0% 127.5% 161.8% 33.9% 22.9% -28.3% 18.4% -9.2% Net profit y-o-y -73.2% -23.7% 130.9% 112.4% 915.7% 291.6% 71.9% 125.7% 271.0% 30.3% 22.9% -28.2% -16.9% -9.5% Margins Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20e Q3'20e Q4'20e EBITDA margin -111.6% -77.1% -21.3% -1401.1% -1452.2% -6637.5% -2631.1% -199.4% -124.7% -274.8% -169.1% -142.0% -115.5% -6.4% -10.8% -6.4% EBIT margin -112.8% -78.0% -23.3% -1563.0% -1667.5% -7598.6% -3143.7% -280.1% -191.1% -371.3% -267.4% -207.8% -181.1% -24.7% -27.7% -19.9% Net margin -89.6% -61.6% -19.2% -907.5% -1677.2% -7644.4% -3160.0% -288.9% -191.0% -370.5% -381.0% -208.6% -181.1% -24.7% -27.7% -19.9% Source: ABG Sundal Collier, company data

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Annual estimates overview

Annual overview, 2017-2022e, (SEKm) Annual overview (SEKm) 2017 2018 2019 2020e 2021e 2022e Work - Vobling 0.0 3.0 15.3 17.2 22.4 26.8 Shop - Sayduck 0.0 0.0 1.9 4.9 6.5 7.8 Play - Virtual Brains 0.0 0.0 0.0 2.1 32.1 38.8 Goodbye Kansas Studio 0.0 0.0 0.0 119.7 228.0 256.5 Net Sales 0.0 3.5 17.1 144.0 289.0 329.9

Capitalised production costs 6.4 0.0 1.0 4.6 5.0 5.0 Other operating income 0.0 0.5 0.5 0.4 0.0 0.0 Total operating income 6.4 4.0 18.6 149.0 294.0 334.9

COGS 0.0 -0.2 -4.5 -35.7 -67.6 -73.7 Gross profit 6.4 3.8 14.1 113.2 226.4 261.2

Opex -19.8 -23.9 -49.7 -167.4 -282.3 -311.4 Of w hich Other external expenses -5.1 -7.9 -16.7 -75.5 -127.0 -140.1 Personnel expenses -14.7 -15.8 -28.1 -91.9 -155.3 -171.3 Other operating expenses 0.0 0.0 -0.4 0.0 0.0 0.0

EBITDA -13.4 -19.9 -31.1 -18.5 11.7 23.5

D&A -0.4 -4.9 -14.6 -26.7 -30.0 -30.0

EBIT -13.7 -24.7 -45.7 -45.2 -18.3 -6.5

Non-recurring items 0.0 0.0 0.0 0.0 0.0 0.0

Net financials -0.2 -0.1 0.1 0.0 0.0 0.0

EBT -13.9 -24.8 -45.7 -45.2 -18.3 -6.5

Taxes 0.0 -0.3 0.0 0.0 0.0 0.0 Tax rate -0.3% -1.2% 0.0% 0.0% 0.0% 0.0%

Net profit -10.9 -25.1 -45.7 -45.2 -18.3 -6.5

EPS Basic (SEK) -0.43 -0.63 -0.83 -0.48 -0.19 -0.07 EPS Diluted (SEK) -0.38 -0.61 -0.78 -0.46 -0.19 -0.07 Grow th 2017 2018 2019 2020e 2021e 2022e Sales y-o-y 392.0% 742.8% 100.7% 14.2% Sales organic y-o-y 25.2% 46.1% 14.2% EBITDA y-o-y 85.0% -1.2% -59.4% -64.5% EBIT y-o-y 85.0% -1.2% -59.4% -64.5% Net profit y-o-y 81.8% -1.1% -59.4% -64.5% Margins 2017 2018 2019 2020e 2021e 2022e Gross margin 95.3% 75.8% 76.0% 77.0% 78.0% EBITDA margin -498.9% -167.5% -12.4% 4.0% 7.0% EBIT margin -620.9% -246.3% -30.3% -6.2% -1.9% Net margin -630.7% -245.9% -30.3% -6.2% -1.9%

Source: ABG Sundal Collier, company data

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Segment estimates overview

Segment estimates, (SEKm) Work - Vobling Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20e Q3'20e Q4'20e 2017 2018 2019 2020e 2021e 2022e Sales 4.7 3.2 3.0 4.4 3.9 3.6 4.0 5.7 14.2 14.3 15.6 17.2 22.4 26.8 Sales grow th y-o-y (%) -17.0% 15.0% 30.0% 30.0% 0.7% 9.1% 10.3% 30.0% 20.0% Sales grow th q-o-q (%) -32.9% -3.6% 44.7% -11.4% -7.0% 9.0% 44.7% EBITDA 1.4 0.3 1.0 0.5 1.2 0.8 0.8 1.4 3.2 4.2 5.2 6.8 EBITDA margin 29.8% 8.8% 32.4% 11.4% 30.8% 22.5% 20.0% 25.0% 20.3% 24.6% 23.3% 25.2% Shop - Sayduck Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20e Q3'20e Q4'20e 2017 2018 2019 2020e 2021e 2022e Sales 0.0 0.0 1.1 0.8 0.7 1.3 1.6 1.4 3.3 2.7 4.2 4.9 6.5 7.8 Sales grow th y-o-y (%) 45.0% 70.0% -17.5% 57.0% 16.8% 31.4% 20.0% Sales grow th q-o-q (%) -26.8% -12.5% 85.7% 21.9% -14.2% EBITDA 0.0 0.0 -0.1 0.0 -0.4 0.1 0.3 0.1 -0.1 0.1 1.1 2.0 EBITDA margin -6.9% 0.0% -57.1% 5.8% 21.2% 6.4% -1.8% 2.0% 17.6% 25.7% Play - Virtual Brains Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20e Q3'20e Q4'20e 2017 2018 2019 2020e 2021e 2022e Sales 0.0 0.0 0.0 0.0 0.0 0.1 1.0 1.0 2.1 32.1 38.8 Sales grow th y-o-y (%) 1467.1% 20.7% Sales grow th q-o-q (%) n.a. 0.0% EBITDA -3.6 -4.0 -14.3 6.6 10.3 EBITDA margin -355.0% -400.5% -699.5% 20.5% 26.6% Goodbye Kansas Studios Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20e Q3'20e Q4'20e 2017 2018 2019 2020e 2021e 2022e Sales 65.0 45.0 40.0 50.0 158.0 164.0 156.0 200.0 228.0 256.5 Sales grow th y-o-y (%) 25.0% 3.8% -4.9% 28.2% 14.0% 12.5% Sales grow th q-o-q (%) EBITDA 6.5 2.9 2.0 3.5 16.0 -58.0 n.a 14.9 18.3 24.8 EBITDA margin 10.1% -35.4% n.a. 7.5% 8.0% 9.7%

Group* Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20e Q3'20e Q4'20e 2017 2018 2019 2020e 2021e 2022e Sales 4.7 3.2 4.0 5.3 4.7 34.7 46.5 58.1 0.0 3.5 17.1 144.0 289.0 329.9 Sales grow th y-o-y (%) 1516% 8661% 15808% 69% 0% 999% 1070% 1003% 742.8% 100.7% 14.2% Organic 46% -28% 8% 64% 53% 25.2% 46.1% 14.2% Sales grow th q-o-q (%) 50.2% -32.7% 26.1% 32.4% -11.3% 642.5% 34.2% 24.8%

Segment EBITDA -2.6 -3.7 -3.1 -4.5 -2.6 2.4 -0.4 1.0 -13.9 0.4 31.3 43.9 Segment EBITDA margin -55.5% -118.0% -77.7% -85.5% -55.7% 6.8% -0.9% 1.7% 0.2% 10.8% 13.3%

Group costs -3.4 -5.5 -3.9 -4.4 -4.6 -4.7 -4.7 -4.8 -17.2 -18.8 -19.6 -20.4

Group EBITDA -6.0 -9.2 -7.0 -8.9 -7.2 -2.3 -5.2 -3.8 -13.4 -19.9 -31.1 -18.5 11.7 23.5 Group EBITDA margin -128.5% -292.0% -176.7% -168.2% -155.0% -6.7% -11.1% -6.5% -572.3% -182.2% -12.8% 4.0% 7.1% *Goodbye Kansas Studios included from 1 May 2020

Source: ABG Sundal Collier, company data

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Valuation

We look at Bublar in terms of 1) three sum-of-the-parts valuation scenarios based on different 2021e EV/sales multiples, and we reduce our 2021e sales assumptions by a WACC of 12.0% and 2) a peer group comparison. We also highlight a precedent transaction in Epic Games acquisition of the Swedish company Quixel, which can offer some guidance when evaluating Goodbye Kansas Studios.

Sum-of-the-parts We have attempted to identify potential valuation multiples for Bublar’s various segments based on the valuation of relevant peers, which are included in the peer table on the next page.

For example, in valuing Bublar’s Play segment, we look to mobile gaming developers and publishers like G5 Entertainment, Mag Interactive and Ten Square Games. The Shop and Work segments are trickier, as there are no comparable peers listed in the Nordics, and as such we prefer to use a group or Nordic software companies, like Litium and Safeture, for valuation guidance. The newly acquired Goodbye Kansas Studios differs from the rest of the group, both in size and operations; relevant peers are usually divisions within mid-sized and large gaming publishers, like Remedy Entertainment and Activision Blizzard. However, there are very few stand-alone, publicly traded, peers.

Below we highlight our sales estimates and growth assumptions for 2021e, which we lower with a WACC of 12.0%, and on which we base our SOTP valuation range. We note that we base our 2021 estimates on 94.2mn outstanding shares, which assumes that Goodbye Kansas Studios does not reach its highest earn-out of achieving 2020 EBITDA of SEK 18m.

Sum-of-the-parts assumptions overview, (SEKm) SOTP (SEKm) Sales - 2021e Growth estimates

Work - Vobling 22 30% Shop - Sayduck 6 31% Play - Virtual Brains 32 1467% Goodbye Kansas Studio 228 14% Number of shares (m) 94.2

Source: ABG Sundal Collier, company data

Ultimately, our three SOTP valuation scenarios indicate a fair value range of SEK 2.8-7.9 per share, based on the following assumptions and our 2021e estimates.

Sum-of-the-parts valuation overview, (SEKm) SOTP (SEKm) Scenario 1 Valuation Value per share Scenario 2 Valuation Value per share Scenario 3 Valuation Value per share

Work - Vobling 2.0x EV/Sales 21e 45 0.5 5.0x EV/Sales 21e 112 1.2 6.0x EV/Sales 21e 134 1.4 Shop - Sayduck 2.0x EV/Sales 21e 13 0.1 5.0x EV/Sales 21e 32 0.3 6.0x EV/Sales 21e 39 0.4 Play - Virtual Brains 1.0x EV/Sales 21e 32 0.3 2.0x EV/Sales 21e 64 0.7 3.0x EV/Sales 21e 96 1.0 Goodbye Kansas Studio 1.0x EV/Sales 21e 171 1.8 1.5x EV/Sales 21e 342 3.6 2.5x EV/Sales 21e 570 6.1 Enterprise value 261 2.8 Enterprise value 551 5.8 Enterprise value 840 8.9 Net debt (21e) -47 -0.5 Net debt (21e) -47 -0.5 Net debt (21e) -47 -0.5 Market cap 308 3.3 Market cap 598 6.3 Market cap 887 9.4 Discounted (12% WACC) 260 2.8 Discounted (12% WACC) 504 5.3 Discounted (12% WACC) 748 7.9

Source: ABG Sundal Collier, company data

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Relative valuation In order to obtain a comprehensive overview of the valuation and operational performance of corporations that are comparable to Bublar’s different segments, we choose to highlight a selection of Nordic software companies and a group of mobile gaming developers and publishers.

Valuation and operative performance across peer groups Nordic software Mcap Share price P/E (x) EV/EBIT (x) EV/EBITDA (x) EBIT-margin (%) EBITDA-margin (%) EV/Sales (x) ROE (%) CAGR '19-'22e Company (SEKm) Ccy SP 2020e 2021e 2022e 2020e 2021e 2022e 2020e 2021e 2022e 2020e 2021e 2022e 2020e 2021e 2022e 2020e 2021e 2022e 2020e 2021e 2022e Sales EBIT

Lime Technologies 3,268 SEK 246 56.7 45.0 38.8 52.0 39.9 33.0 32.8 27.3 23.6 19.3 21.2 21.9 30.5 31.0 30.5 10.0 8.5 7.2 61.0 55.1 47.5 15.3 23.1 Sinch 45,909 SEK 779 85.5 61.3 48.5 73.9 49.6 37.1 57.3 40.4 32.0 9.1 8.7 9.9 11.7 10.7 11.4 6.7 4.3 3.7 13.1 16.1 17.3 34.5 41.4 FormPipe 1,347 SEK 25 35.7 30.4 27.2 26.7 22.5 19.6 13.3 12.0 10.9 12.7 13.8 14.7 25.4 25.9 26.5 3.4 3.1 2.9 8.8 10.1 11.0 3.6 10.4 Admicom 4,395 SEK 892 56.1 41.6 32.2 44.0 32.2 41.3 31.7 40.7 43.7 45.1 43.4 44.4 45.7 17.9 14.1 33.4 38.6 41.3 n.a. n.a. Fortnox 14,733 SEK 245 76.8 61.3 48.8 58.4 46.2 36.3 56.4 45.1 34.0 35.4 36.0 37.1 36.7 36.8 39.6 20.7 16.6 13.5 43.2 37.6 34.3 25.2 30.5 Addnode 6,044 SEK 181 43.9 29.3 24.9 32.6 22.0 18.6 15.8 13.2 11.7 4.8 6.5 7.1 10.0 10.8 11.3 1.6 1.4 1.3 9.4 13.1 14.2 10.3 14.5 Vitec Softw are 6,872 SEK 213 39.0 32.6 28.6 43.0 34.6 29.6 18.3 15.9 13.9 13.4 15.3 15.9 31.4 33.3 33.9 5.7 5.3 4.7 22.4 23.3 22.0 11.0 20.1 IAR Systems 1,491 SEK 109 23.9 16.8 16.3 18.4 12.8 12.6 11.4 8.3 7.8 20.6 25.2 24.0 33.4 38.8 39.0 3.8 3.2 3.0 9.7 12.7 12.7 6.8 3.2 Micro Systemation 436 SEK 24 57.6 13.1 10.2 21.8 20.4 6.5 15.9 6.7 5.3 4.0 12.0 14.0 7.7 15.2 16.9 7.1 5.9 0.9 9.3 32.0 36.0 10.7 107.9 Safeture 270 SEK 11 130.6 21.8 20.4 109.1 65.9 -64.0 -25.9 4.8 -54.7 -20.3 8.0 7.1 5.9 5.3 -190.6 183.4 32.9 n.a. Litium 191 SEK 15 33.6 27.5 12.5 -35.7 -11.7 7.9 -19.9 -0.2 17.3 3.5 2.8 2.2 -31.7 -16.8 10.1 29.4 n.a. Peer average 7,723 52.8 36.8 40.0 39.3 30.1 33.0 29.2 22.3 21.8 5.5 13.2 18.4 14.1 20.6 25.5 8.0 6.5 4.5 -1.1 22.2 39.1 18.0 31.4 Peer median 3,268 56.1 32.6 32.2 37.8 27.4 28.5 18.3 15.9 13.2 12.7 13.8 14.7 25.4 25.9 26.5 6.7 5.3 3.3 9.7 19.7 22.0 13.1 21.6 Bublar Group (ABGSCe) 358 SEK 4 -7.9 -19.5 -54.9 -7.0 -16.9 -45.4 -17.0 26.6 12.6 -30.3 -6.2 -1.9 -12.4 4.0 7.0 2.2 1.1 0.9 -51.7 -17.8 -8.4 168.3 -47.8 vs peer average -115% -153% -237% -118% -156% -238% -158% 19% -42% -653% -147% -111% -188% -81% -72% -72% -83% -80% 4641% -180% -121% 836% -252% vs peer median -114% -160% -271% -118% -162% -259% -193% 67% -5% -339% -145% -113% -149% -85% -73% -67% -80% -73% -631% -191% -138% 1180% -321% Mobile developers & publishers Mcap Share price P/E (x) EV/EBIT (x) EV/EBITDA (x) EBIT-margin (%) EBITDA-margin (%) EV/Sales (x) ROE (%) CAGR '19-'22e Company (SEKm) Ccy SP 2020e 2021e 2022e 2020e 2021e 2022e 2020e 2021e 2022e 2020e 2021e 2022e 2020e 2021e 2022e 2020e 2021e 2022e 2020e 2021e 2022e Sales EBIT

Com2us 9,949 SEK 820 11.0 9.1 8.4 5.3 3.4 2.6 5.0 3.3 2.5 26.0 27.3 28.1 27.8 28.8 29.2 1.4 0.9 0.7 11.7 12.5 12.1 n.a. n.a. Stillfront 28,510 SEK 835 24.7 20.7 18.9 19.9 16.1 14.1 16.6 13.4 11.6 34.6 35.2 35.3 41.4 42.1 43.1 6.9 5.7 5.0 25.3 25.1 22.9 41.5 46.4 Zynga 85,877 SEK 90 30.8 26.7 22.0 21.4 17.2 13.2 21.7 17.7 14.1 21.1 22.9 26.3 20.8 22.2 24.7 4.5 3.9 3.5 16.8 17.2 18.3 11.7 25.1 Mag Interactive 745 SEK 28 61.0 34.8 19.6 13.3 -2.5 7.0 13.8 18.3 2.7 2.4 -1.9 3.7 12.5 n.a. G5 Entertainment 1,811 SEK 202 22.5 18.1 15.5 16.6 13.5 11.1 7.0 6.1 5.1 7.3 7.9 8.4 17.4 17.4 18.3 1.2 1.1 0.9 17.6 18.3 18.1 9.0 37.5 Ten Square Games 9,386 SEK 1,296 22.7 18.1 16.6 19.3 15.1 13.5 19.1 14.9 13.4 37.7 36.9 36.1 38.1 37.3 36.5 7.3 5.6 4.9 85.1 75.9 62.1 45.6 47.4 Rovio Entertainment 4,444 SEK 58 16.9 16.7 15.6 9.4 8.8 7.7 7.3 7.0 6.4 12.6 12.0 12.5 16.4 15.1 14.9 1.2 1.1 1.0 15.1 13.3 13.4 0.4 21.5 Glu Mobile 14,817 SEK 89 28.2 21.3 13.7 22.3 13.5 7.5 19.4 12.3 7.2 9.9 12.0 14.5 10.7 13.5 16.8 1.8 1.5 1.3 18.8 20.5 23.7 15.7 35.4 Peer average 19,442 22.4 24.0 15.8 16.3 15.3 10.0 14.5 11.0 8.6 18.3 20.2 23.0 23.3 24.3 26.2 3.4 2.8 2.5 23.5 23.3 24.4 19.5 35.6 Peer median 9,667 22.7 19.4 15.6 19.3 14.3 11.1 17.8 12.8 7.2 16.9 17.5 26.3 19.1 20.2 24.7 2.3 2.0 1.3 17.2 17.8 18.3 12.5 36.5 Bublar Group (ABGSCe) 358 SEK 4 -7.9 -19.5 -54.9 -7.0 -16.9 -45.4 -17.0 26.6 12.6 -30.3 -6.2 -1.9 -12.4 4.0 7.0 2.2 1.1 0.9 -51.7 -17.8 -8.4 168.3 -47.8 vs peer average -135% -181% -448% -143% -211% -556% -218% 142% 46% -265% -131% -108% -153% -84% -73% -35% -61% -64% -319% -177% -134% 765% -234% vs peer median -135% -201% -452% -136% -218% -509% -196% 108% 75% -280% -136% -107% -165% -80% -72% -3% -45% -31% -401% -200% -146% 1249% -231%

Source: ABG Sundal Collier (only for Bublar), FactSet, company data

Precedent transactions Quixel was founded in 2011 in Uppsala, and developed a proprietary scanning software which could basically scan everything from a single straw of grass to large landscapes like mountains, which was then imported in a digital format.

In November 2019, Epic Games bought Quixel, and all its intellectual property rights, for an estimated SEK 801m71. Even though Quixel’s scanning software is different from Goodbye Kansas’ solution, which is focused on scanning faces and bodies, we think the transaction highlights the demand for scanning software. If Goodbye Kansas can properly package its software, and create a functioning licensing system, we believe that the software could generate substantial revenue in the long term.

71 https://digital.di.se/artikel/sa-mycket-betalade-amerikanska-speljatten-for-uppsala-bolaget

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Appendix: Management

Management

Source: ABG Sundal Collier, company data

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Board of directors

Source: ABG Sundal Collier, company data

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Appendix: Shareholders

Majority shareholders in co-founders and institutions Bublar Group’s shareholder base is dominated by majority shareholders such as co- founders Magnus Granqvist and Kenneth Häggmark, but also by institutional investors like Handelsbanken Fonder and Nordic Cross Asset Management. Bublar currently has a free float of approximately 100% and foreign ownership as of 31 March 2020 stood at 6%, according todata from Holdings.

Ten largest owners of Bublar Group shares Owner No. of shares % Value (SEKm) Connecting Capital Venture AB 3,563,065 4.3% 14.7 Handelsbanken Fonder 2,700,000 3.2% 11.2 Kenneth Häggmark 2,516,310 3.0% 10.4 Magnus Granqvist 2,516,310 3.0% 10.4 Varde Holding AB 2,500,000 3.0% 10.3 Avanza Pension 2,254,180 2.7% 9.3 Åhlén-stiftelsen 2,213,822 2.7% 9.1 Nordic Cross Asset Management 1,445,000 1.7% 6.0 Alexander Hamilton 964,320 1.2% 4.0 Deepio AB 922,490 1.1% 3.8

Source: ABG Sundal Collier, Holdings, company data

Insider ownership in Bublar Group Owner No. of shares % Value (SEKm) Position Magnus Granqvist 2,516,310 3.0% 10.4 Co-founder & MD, Virtual Brains Kenneth Häggmark 2,516,310 3.0% 10.4 Co-founder& CTO Alexander Hamilton 964,320 1.2% 4.0 MD, Vobling Asia Anders Ribbing 806,289 1.0% 3.3 MD, Vobling Axel Ljung 762,822 0.9% 3.2 Softw are developer Niklas Slotte 714,085 0.9% 2.9 MD, Sayduck Magnus Rudling 325,910 0.4% 1.3 Business Director Anders Lindell 214,000 0.3% 0.9 CFO Staffan Eklöw 100,000 0.1% 0.4 Chairman of the Board Maria Andersson Grimaldi 70,469 0.1% 0.3 CEO Per Storløkken 15,000 0.0% 0.1 Senior Producer

Source: ABG Sundal Collier, Holdings, company data

29 June 2020 ABG Sundal Collier 44

Bublar Group

Income Statement (SEKm) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020e Q3 2020e Q4 2020e Sales 5 3 4 5 5 35 47 58 COGS 0 0 0 0 0 0 0 0 Gross profit 5 3 4 5 5 35 47 58 Other operating items -11 -12 -11 -14 -12 -37 -52 -62 EBITDA -6 -9 -7 -9 -7 -2 -5 -4 Depreciation and amortisation -3 -3 -4 -4 -4 -7 -8 -8 EBITA -9 -12 -11 -13 -11 -9 -13 -12 EO items 0 0 0 0 0 0 0 0 Impairment and PPA amortisation 0 0 0 0 0 0 0 0 EBIT -9 -12 -11 -13 -11 -9 -13 -12 Net financial items -0 -0 -0 -0 -0 0 0 0 Pretax profit -9 -12 -11 -13 -11 -9 -13 -12 Tax 0 0 0 -0 0 0 0 0 Net profit -9 -12 -11 -13 -11 -9 -13 -12 Minority interest 0 0 0 0 0 0 0 0 Net profit discontinued 0 0 0 0 0 0 0 0 Net profit to shareholders -9 -12 -11 -13 -11 -9 -13 -12 EPS -0.03 -0.03 -0.03 -0.04 0 0 0 0 EPS Adj -0.03 -0.03 -0.03 -0.04 0 0 0 0 Total extraordinary items after tax 0 0 0 0 0 0 0 0 Tax rate (%) 0 0 0 0.4 0 0 0 0 Gross margin (%) 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 EBITDA margin (%) -128.5 -292.0 -176.7 -168.2 -155.0 -6.7 -11.1 -6.5 EBITA margin (%) -196.9 -394.6 -279.3 -246.2 -242.9 -25.7 -28.3 -20.3 EBIT margin (%) -196.9 -394.6 -279.3 -246.2 -242.9 -25.7 -28.3 -20.3 Pretax margin (%) -197.5 -395.1 -279.7 -246.6 -243.2 -25.7 -28.3 -20.3 Net margin (%) -197.5 -395.1 -279.7 -247.6 -243.2 -25.7 -28.3 -20.3 Growth rates Y/Y Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020e Q3 2020e Q4 2020e Sales growth (%) 1,516.2 8,661.1 15,808.0 68.7 -0.4 999.4 1,070.2 1,003.3 EBITDA growth (%) -chg -chg -chg -chg -chg +chg +chg +chg EBIT growth (%) -chg -chg -chg -chg -chg +chg -chg +chg Net profit growth (%) -chg -chg -chg -chg -chg +chg -chg +chg EPS growth (%) -chg -chg -chg -chg -chg +chg -chg +chg Adj earnings numbers Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020e Q3 2020e Q4 2020e EBITDA Adj -6 -9 -7 -9 -7 -2 -5 -4 EBITDA Adj margin (%) -128.5 -292.0 -176.7 -168.2 -155.0 -6.7 -11.1 -6.5 EBITA Adj -9 -12 -11 -13 -11 -9 -13 -12 EBITA Adj margin (%) -196.9 -394.6 -279.3 -246.2 -242.9 -25.7 -28.3 -20.3 EBIT Adj -9 -12 -11 -13 -11 -9 -13 -12 EBIT Adj margin (%) -196.9 -394.6 -279.3 -246.2 -242.9 -25.7 -28.3 -20.3 Pretax profit Adj -9 -12 -11 -13 -11 -9 -13 -12 Net profit Adj -9 -12 -11 -13 -11 -9 -13 -12 Net profit to shareholders Adj -9 -12 -11 -13 -11 -9 -13 -12 Net Adj margin (%) -197.5 -395.1 -279.7 -247.6 -243.2 -25.7 -28.3 -20.3 Source: ABG Sundal Collier, Company data

29 June 2020 ABG Sundal Collier 45

Bublar Group

Income Statement (SEKm) 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e Sales 0 0 0 0 0 3 17 144 289 330 COGS 0 0 0 0 0 -0 -4 -36 -68 -74 Gross profit 0 0 0 0 0 3 13 108 221 256 Other operating items 0 0 0 0 -13 -23 -44 -127 -210 -233 EBITDA 0 0 0 0 -13 -20 -31 -18 12 23 Depreciation and amortisation 0 0 0 0 -0 -5 -15 -27 -30 -30 Of which leasing depreciation 0 0 0 0 0 0 0 0 0 0 EBITA 0 0 0 0 -14 -25 -46 -45 -18 -7 EO items 0 0 0 0 0 0 0 0 0 0 Impairment and PPA amortisation 0 0 0 0 0 0 0 0 0 0 EBIT 0 0 0 0 -14 -25 -46 -45 -18 -7 Net financial items 0 0 0 -0 -0 -0 0 0 0 0 Pretax profit 0 0 0 -0 -14 -25 -46 -45 -18 -7 Tax 0 0 0 0 3 -0 0 0 0 0 Net profit 0 0 0 -0 -11 -25 -46 -45 -18 -7 Minority interest 0 0 0 0 0 0 0 0 0 0 Net profit discontinued 0 0 0 0 0 0 0 0 0 0 Net profit to shareholders 0 0 0 -0 -11 -25 -46 -45 -18 -7 EPS 0 0 0 0 -0.38 -0.61 -0.78 -0.46 -0.19 -0.07 EPS Adj 0 0 0 0 -0.38 -0.61 -0.78 -0.46 -0.19 -0.07 Total extraordinary items after tax 0 0 0 0 0 0 0 0 0 0 Leasing payments 0 0 0 0 0 0 0 0 0 0 Tax rate (%) ns ns ns 0 21.4 1.2 0 0 0 0 Gross margin (%) nm nm nm nm nm 94.6 73.7 75.2 76.6 77.7 EBITDA margin (%) nm nm nm nm nm -572.3 -182.2 -12.8 4.0 7.1 EBITA margin (%) nm nm nm nm nm -712.3 -267.8 -31.4 -6.3 -2.0 EBIT margin (%) nm nm nm nm nm -712.3 -267.8 -31.4 -6.3 -2.0 Pretax margin (%) nm nm nm nm nm -715.0 -267.4 -31.4 -6.3 -2.0 Net margin (%) nm nm nm nm nm -723.5 -267.4 -31.4 -6.3 -2.0 Growth rates Y/Y 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e Sales growth (%) na na na na na na 392.0 742.8 100.7 14.2 EBITDA growth (%) na na na na high -48.6 -56.6 40.6 163.1 101.3 EBIT growth (%) na na na na high -79.9 -85.0 1.2 59.4 64.5 Net profit growth (%) na na na high ######## -129.8 -81.8 1.1 59.4 64.5 EPS growth (%) na na na na high -63.3 -26.6 40.6 59.4 64.5 Profitability 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e ROE (%) nm nm nm nm -67.5 -43.0 -50.8 -35.6 -12.4 -4.9 ROE Adj (%) nm nm nm nm -67.5 -43.0 -50.8 -35.6 -12.4 -4.9 ROCE (%) 0 nm nm nm -79.7 -41.1 -50.1 -35.2 -12.3 -4.9 ROCE Adj(%) 0 nm nm nm -79.7 -41.1 -50.1 -35.2 -12.3 -4.9 ROIC (%) nm nm na 0 -226.6 -71.7 -76.4 -51.7 -17.8 -8.4 ROIC Adj (%) nm nm na 0 -226.6 -71.7 -76.4 -51.7 -17.8 -8.4 Adj earnings numbers 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e EBITDA Adj 0 0 0 0 -13 -20 -31 -18 12 23 EBITDA Adj margin (%) nm nm nm nm nm -572.3 -182.2 -12.8 4.0 7.1 EBITDA lease Adj 0 0 0 0 -13 -20 -31 -18 12 23 EBITDA lease Adj margin (%) nm nm nm nm nm -572.3 -182.2 -12.8 4.0 7.1 EBITA Adj 0 0 0 0 -14 -25 -46 -45 -18 -7 EBITA Adj margin (%) nm nm nm nm nm -712.3 -267.8 -31.4 -6.3 -2.0 EBIT Adj 0 0 0 0 -14 -25 -46 -45 -18 -7 EBIT Adj margin (%) nm nm nm nm nm -712.3 -267.8 -31.4 -6.3 -2.0 Pretax profit Adj 0 0 0 -0 -14 -25 -46 -45 -18 -7 Net profit Adj 0 0 0 -0 -11 -25 -46 -45 -18 -7 Net profit to shareholders Adj 0 0 0 -0 -11 -25 -46 -45 -18 -7 Net Adj margin (%) nm nm nm nm nm -723.5 -267.4 -31.4 -6.3 -2.0 Source: ABG Sundal Collier, Company data

29 June 2020 ABG Sundal Collier 46

Bublar Group

Cash Flow Statement (SEKm) 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e EBITDA 0 0 0 0 -13 -20 -31 -18 12 23 Net financial items 0 0 0 -0 -0 -0 0 0 0 0 Paid tax 0 0 0 0 -0 0 -1 0 0 0 Non-cash items 1 0 0 0 0 0 0 0 0 0 Cash flow before change in WC 1 0 0 -0 -14 -20 -32 -18 12 23 Change in WC -1 0 0 0 3 -5 5 0 0 0 Operating cash flow 0 0 0 0 -13 -27 -27 -18 12 23 CAPEX tangible fixed assets 0 0 0 0 -0 -0 -1 -1 -3 -3 CAPEX intangible fixed assets 0 0 0 0 -6 -0 -2 -3 -4 -6 Acquisitions and disposals 0 0 0 0 0 -49 -14 -141 0 0 Free cash flow 0 0 0 0 -19 -76 -44 -164 4 15 Dividend paid 0 0 0 0 0 0 0 0 0 0 Share issues and buybacks 0 0 0 0 36 77 62 191 0 0 Lease liability amortisation 0 0 0 0 0 0 0 0 0 0 Other non cash items 1 -0 0 -0 5 -3 -5 -20 0 0 Decrease in net IB debt 1 0 0 0 23 1 12 7 4 15 Balance Sheet (SEKm) 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e Goodwill 0 0 0 0 0 48 51 107 80 53 Other intangible assets 0 0 0 0 12 10 10 10 12 14 Tangible fixed assets 0 0 0 0 1 1 1 1 1 1 Right-of-use asset 0 0 0 0 0 0 0 0 0 0 Total other fixed assets 0 0 0 0 5 5 0 0 0 0 Fixed assets 0 0 0 0 18 63 62 118 93 68 Inventories 0 0 0 0 0 0 0 0 0 0 Receivables 0 0 0 0 1 9 5 5 5 5 Other current assets 0 0 0 0 0 1 2 2 2 2 Cash and liquid assets 0 0 0 0 21 20 37 44 49 63 Total assets 0 0 0 0 40 93 106 169 148 138 Shareholders equity 0 0 0 0 32 84 96 158 137 127 Minority 0 0 0 0 0 0 0 0 0 0 Total equity 0 0 0 0 32 84 96 158 137 127 Long-term debt 0 0 0 0 1 0 1 1 1 1 Pension debt 0 0 0 0 0 0 0 0 0 0 Convertible debt 0 0 0 0 0 0 0 0 0 0 Leasing liability 0 0 0 0 0 0 0 0 0 0 Total other long-term liabilities 0 0 0 0 0 0 0 0 0 0 Short-term debt 0 0 0 0 2 1 0 0 0 0 Accounts payable 0 0 0 0 1 1 2 2 2 2 Other current liabilities -0 0 0 0 4 6 7 7 7 7 Total liabilities and equity -0 0 0 0 40 93 106 169 148 138 Net IB debt 0 0 0 0 -23 -24 -36 -43 -47 -62 Net IB debt excl. pension debt 0 0 0 0 -23 -24 -36 -43 -47 -62 Net IB debt excl. leasing 0 0 0 0 -23 -24 -36 -43 -47 -62 Capital invested 0 0 0 -0 10 60 59 116 90 65 Working capital 0 0 0 -0 -3 2 -3 -3 -3 -3 EV breakdown 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e Market cap. diluted (m) na na na na 99 267 312 373 373 373 Net IB debt Adj 0 0 0 0 -23 -24 -36 -43 -47 -62 Market value of minority 0 0 0 0 0 0 0 0 0 0 Reversal of shares and participations 0 0 0 0 0 0 0 0 0 0 Reversal of conv. debt assumed equity 0 0 0 0 0 0 0 0 0 0 EV na na na na 76 243 276 330 326 311 Capital efficiency 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e Total assets turnover (%) nm nm nm nm 0 5.2 17.2 104.6 182.3 230.7 Working capital/sales (%) nm nm nm nm nm -20.0 -1.8 -1.8 -0.9 -0.8 Financial risk and debt service 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e Net debt/equity nm nm nm nm -0.71 -0.29 -0.38 -0.27 -0.35 -0.49 Net debt/market cap na na na na -0.27 -0.14 -0.14 -0.12 -0.13 -0.17 Equity ratio (%) nm nm nm nm 81.8 90.8 90.1 93.7 92.8 92.3 Net IB debt adj./equity nm nm nm nm -0.71 -0.29 -0.38 -0.27 -0.35 -0.49 Current ratio 0 nm nm 0 3.53 3.52 4.76 5.54 6.03 7.61 EBITDA/net interest na na na 0 high -209.17 -420.46 -1,540.02 high high Net IB debt/EBITDA nm nm nm nm 1.71 1.21 1.16 2.33 -4.07 -2.64 Net IB debt/EBITDA lease Adj nm nm nm nm 1.71 1.21 1.16 2.33 -4.07 -2.64 Interest cover nm nm nm 0 nm -260.32 618.15 -3,765.60 nm nm Source: ABG Sundal Collier, Company data

29 June 2020 ABG Sundal Collier 47

Bublar Group

Valuation and Ratios (SEKm) 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e Shares outstanding adj. 0 0 0 0 25 40 55 94 94 94 Fully diluted shares Adj 0 0 0 0 29 41 59 98 98 98 EPS 0 0 0 0 -0.38 -0.61 -0.78 -0.46 -0.19 -0.07 Dividend per share Adj 0 0 0 0 0 0 0 0 0 0 EPS Adj 0 0 0 0 -0.38 -0.61 -0.78 -0.46 -0.19 -0.07 BVPS 0 0 0 0 1.28 2.11 1.74 1.68 1.46 1.35 BVPS Adj 0 0 0 0 0.79 0.67 0.63 0.44 0.49 0.64 Net IB debt / share na na na na -0.9 -0.6 -0.7 -0.5 -0.5 -0.7 Share price na na na na 3.40 6.50 5.30 3.80 3.80 3.80 Market cap. (m) na na na na 86 260 291 358 358 358 Valuation 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e P/E na na na na -9.1 -10.6 -6.8 -8.3 -20.4 -57.3 EV/sales na na na na nm 69.86 16.16 2.29 1.13 0.94 EV/EBITDA na na na na -5.7 -12.2 -8.9 -17.9 27.9 13.3 EV/EBITA na na na na -5.5 -9.8 -6.0 -7.3 -17.8 -47.8 EV/EBIT na na na na -5.5 -9.8 -6.0 -7.3 -17.8 -47.8 Dividend yield (%) na na na na 0 0 0 0 0 0 FCF yield (%) na na na na -19.5 -28.5 -14.0 -43.9 1.2 3.9 Lease adj. FCF yield (%) na na na na -19.5 -28.5 -14.0 -43.9 1.2 3.9 P/BVPS na na na na 2.65 3.09 3.04 2.26 2.61 2.81 P/BVPS Adj na na na na 4.29 9.77 8.42 8.67 7.83 5.93 P/E Adj na na na na -9.1 -10.6 -6.8 -8.3 -20.4 -57.3 EV/EBITDA Adj na na na na -5.7 -12.2 -8.9 -17.9 27.9 13.3 EV/EBITA Adj na na na na -5.5 -9.8 -6.0 -7.3 -17.8 -47.8 EV/EBIT Adj na na na na -5.5 -9.8 -6.0 -7.3 -17.8 -47.8 EV/cap. employed na na na na 2.2 2.8 2.8 2.1 2.3 2.4 Investment ratios 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e Capex/sales nm nm nm nm nm 5.6 18.7 3.0 2.5 2.7 Capex/depreciation nm nm nm nm 1,813.6 4.0 21.8 16.2 24.1 29.7 Capex tangibles/tangible fixed assets nm nm nm nm 67.5 32.6 85.5 144.0 289.0 329.9 Capex intangibles/definite intangibles nm nm nm nm 51.8 0.2 23.0 28.0 37.3 39.4 Depreciation on intangibles/definite intangibles nm nm nm nm 3.0 49.3 145.0 259.4 257.9 210.7 Depreciation on tangibles/tangibles nm nm nm nm 0 0 0 0 0 0 Source: ABG Sundal Collier, Company data

29 June 2020 ABG Sundal Collier 48

BublarBublar Group Group

Analyst certification I/We, Jesper Birch-Jensen, Simon Granath, the author(s) of this report, certify that not withstanding the existence of any such potential conflicts of interests referred to below, the views expressed in this report accurately reflect my/our personal view about the companies and securities covered in this report.

Analyst valuation methods ABG Sundal Collier analysts may publish valuation ranges for stocks covered under Company Sponsored Research. These valuation ranges rely on various valuation methods. One of the most frequently used methods is the valuation of a company by calculation of that company's discounted cash flow (DCF). Another valuation method is the analysis of a company's return on capital employed relative to its cost of capital. Finally, the analysts may analyse various valuation multiples (e.g. the P/E multiples and the EV/EBITDA multiples) relative to global industry peers. In special cases, particularly for property companies and investment companies, the ratio of price to net asset value is considered. Valuation ranges may be changed when earnings and cash flow forecasts are changed. They may also be changed when the underlying value of a company's assets changes (in the cases of investment companies, property companies or insurance companies) or when factors impacting the required rate of return change.

Important Company Specific Disclosure ssss The following disclosures relate to the relationship between ABG Sundal Collier and its affiliates and the companies covered by ABG Sundal Collier referred to in this research report.

Unless disclosed in this section, ABG Sundal Collier has no required regulatory disclosures to make in relation to an ownership position for the analyst(s) and members of the analyst's household, ownership by ABG Sundal Collier, ownership in ABG Sundal Collier by the company(ies) to whom the report(s) refer(s) to, market making, managed or co-managed public offerings, compensation for provision of certain services, directorship of the analyst, or a member of the analyst's household, or in relation to any contractual obligations to the issuance of this research report.

ABG Sundal Collier has undertaken a contractual obligation to issue this report and receives predetermined compensation from the company covered in this report. A redacted version of this research report has been sent to Bublar Group for the purposes of checking its factual content

only. Any changes made have been based on factual input received. w mo

ABG Sundal Collier is not aware of any other actual, material conflicts of interest of the analyst or ABG Sundal Collier of which the analyst

knows or has reason to know at the time of the publication of this report.

Production of report: 29/06/2020 08:40 CET. All prices are as of market close on 26 June, 2020 unless otherwise noted.

Disclaimer This document has been prepared by ABG Sundal Collier which is the marketing name referring to all or any of ABG Sundal Collier ASA, ABG Sundal Collier AB or ABG Sundal Collier Partners LLP and any of their affiliated or associated companies and their directors, officers, representatives and employees.

This research product is commissioned and paid for by the company covered in this report. As such, this report is deemed to constitute an acceptable minor non-monetary benefit (i.e. not investment research) as defined in MiFID II.

This research product has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination.

This report is provided solely for the information and use of professional investors, who are expected to make their own investment decisions without undue reliance on this report. The information contained herein does not apply to, and should not be relied upon by, retail clients. This report is for distribution only under such circumstances as may be permitted by applicable law. Research reports prepared by ABG Sundal Collier are for information purposes only. ABG Sundal Collier accepts no liability whatsoever for any losses arising from any use of this report or its contents. This report is not to be used or considered as an offer to sell, or a solicitation of an offer to buy. The information herein has been obtained from, and any opinions herein are based upon, sources believed reliable, but ABG Sundal Collier makes no representation as to its accuracy or completeness and it should not be relied upon as such. All opinions and estimates herein reflect the judgment of ABG Sundal Collier on the date of this report and are subject to change without notice. Past performance is not indicative of future results.

This research report does not, and does not attempt to contain everything material that there is to be said about Bublar Group.

The compensation of our research analysts is determined exclusively by research management and senior management, but not including investment banking management. Compensation is not based on specific investment banking revenues, however, it is determined from the profitability of the ABG Sundal Collier Group, which includes earnings from investment banking operations and other business. Investors should assume that ABG Sundal Collier is seeking or will seek investment banking or other business relationships with the companies in this report. The research analyst(s) responsible for the preparation of this report may interact with trading desk and sales personnel and other departments for the purpose of gathering, synthesizing and interpreting market information. From time to time, ABG Sundal Collier and its affiliates and any shareholders, directors, officers or employees thereof may (I) have a position in, or otherwise be interested in, any securities directly or indirectly connected to the subject of this report, or (II) perform investment banking or other services for, or solicit investment banking or other services from, a company mentioned in this report. ABG Sundal Collier relies on information barriers to control the flow of information contained in one or more areas of ABG Sundal Collier, into other areas, units, groups or affiliates of ABG Sundal Collier.

Norway: ABG Sundal Collier ASA is regulated by the Financial Supervisory Authority of Norway (Finanstilsynet); Sweden: ABG Sundal Collier AB is regulated by the Swedish Financial Supervisory Authority (Finansinspektionen); UK: This report is a communication made, or approved for communication in the UK, by ABG Sundal Collier Partners LLP, authorised and regulated by the Financial Conduct Authority in the conduct of its business. US: This report is being distributed in the United States in accordance with FINRA Rule 1050(f)(3)(B) by ABG Sundal Collier Inc., a FINRA member which accepts responsibility for its content. Research analysts are not registered/qualified as research analysts with FINRA or the NYSE, and are not associated persons of ABG Sundal Collier Inc. and therefore not subject to FINRA Rule 2241, the research analyst conflict rules. Research reports distributed in the U.S are intended solely for “major institutional investors”, as defined under Rule 15a-6 of the Securities Exchange Act of 1934. Each U.S major institutional investor that receives a copy of this research report by its acceptance represents that it agrees 29 June 2020 ABG Sundal Collier 49

BublarBublar Group Group

it will not distribute this research report to any other person. Any U.S. major institutional investor receiving this report who wishes to effect transactions in any securities referred to herein should contact ABG Sundal Collier Inc., not its affiliates. Further information on the securities referred to herein may be obtained from ABG Sundal Collier Inc., on request.

Singapore: This report is distributed in Singapore by ABG Sundal Collier Pte Ltd, which is not licensed under the Financial Advisers Act (Chapter 110 of Singapore). In Singapore, this report may only be distributed to institutional investors as defined in Section 4A(1)(c) of the Securities and Futures Act (Chapter 289 of Singapore) (“SFA”), and should not be circulated to any other person in Singapore.

This report may not be reproduced, distributed or published by any recipient for any purpose whatsoever without the prior written express permission of ABG Sundal Collier. Additional information available upon request. If reference is made in this report to other companies and ABG Sundal Collier provides research coverage for those companies details regarding disclosures may be found on our website www.abgsc.com.

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BublarBublar Group Group

ABGSC Research Department

Joint Global Head of Research John Olaisen +47 22 01 61 87 Christer Linde +46 8 566 286 90

Strategy Metals & Mining Christer Linde, Quant/Technical +46 8 566 286 90 Martin Melbye +47 22 01 61 37 Derek Laliberte +46 8 566 286 78 Bengt Jonassen +47 22 01 60 98 Bengt Jonassen +47 22 01 60 98 Oil & Gas Capital Goods John Olaisen +47 22 01 61 87 Anders Idborg +46 8 566 286 74 Karl Fredrik Schjøtt-Pedersen +47 22 01 61 65 Olof Cederholm +46 8 566 286 22 Eirik Thune Øritsland +47 22 01 61 40 Karl Bokvist +46 8 566 286 33 Oskar Vikström +46 8 566 286 63 Oil Service John Olaisen +47 22 01 61 87 Chemicals Haakon Amundsen +47 22 01 60 25 Martin Melbye +47 22 01 61 37 Lukas Daul +47 22 01 61 39 Bengt Jonassen +47 22 01 60 98 Karl Fredrik Schjøtt-Pedersen +47 22 01 61 65 Petter Nyström +47 22 01 61 35 Eirik Thune Øritsland +47 22 01 61 40

Construction & Real Estate Online Gaming Tobias Kaj +46 8 566 286 21 Aksel Øverland Engebakken +47 22 01 61 11 Bengt Jonassen +47 22 01 60 98 Erik Moberg +46 8 566 286 87 Daniel Vårdal Haugland +47 22 01 61 75 Stefan Knutsson +46 8 566 286 37 Staffan Bülow +46 8 566 286 39 Jesper Birch-Jensen +46 8 566 286 13 Laurits Louis Kjaergaard +45 35 46 30 12 Pulp & Paper Consumer Goods Martin Melbye +47 22 01 61 37 Petter Nyström +47 22 01 61 35 Øystein Elton Lodgaard +47 22 01 60 26 Fredrik Ivarsson +46 8 566 286 95

Credit Research Renewable Energy Rikard Magnus Braaten +47 22 01 60 86 Casper Blom +45 35 46 30 15 Andreas Johannessen +47 22 01 60 31 Petter Nyström +47 22 01 61 35

Haakon Amundsen +47 22 01 60 25 Retail Glenn Kringhaug +47 22 01 61 62 Fredrik Ivarsson +46 8 566 286 95 Karl Fredrik Schjøtt-Pedersen +47 22 01 61 65 Johan Brown +46 8 566 286 51 Ludvig Kapanen +46 8 566 286 91 Petter Nyström +47 22 01 61 35 Financials Seafood Magnus Andersson +46 8 566 294 69 Martin Kaland +47 22 01 60 67 Mads Thinggaard +45 35 46 30 18

Patrik Brattelius +46 8 566 286 64 Services Jan Erik Gjerland +47 22 01 61 16 Victor Forssell +46 8 566 286 92 Jonas Bru Lien +47 22 01 61 71 Stefan Knutsson +46 8 566 286 37

Food & Beverages Shipping & Transport Fredrik Ivarsson +46 8 566 286 95 Dennis Anghelopoulos +47 22 01 60 37 Petter Nyström +47 22 01 61 35 Casper Blom +45 35 46 30 15

Healthcare Lukas Daul +47 22 01 61 39

Rickard Anderkrans +46 8 566 286 73 Telecom Operators + Telecom equipment Viktor Sundberg +46 8 566 286 41 Peter Kurt Nielsen +44 207 905 5631 Victor Forssell +46 8 566 286 92 Jannick Lindegaard Denholt +45 35 46 30 13 Utilities Benjamin Silverstone +45 35 46 30 11 Petter Nyström +47 22 01 61 35

Oskar Vikström +46 8 566 286 63 lnvestment Companies

Derek Laliberte +46 8 566 286 78 Small Caps/Others

Daniel Thorsson +46 8 566 286 82 IT Laurits Louis Kjaergaard +45 35 46 30 12 Aksel Øverland Engebakken +47 22 01 61 11 Edvard Hagman +45 35 46 30 31 Daniel Thorsson +46 8 566 286 82 André Thormann +45 35 46 30 19 Simon Granath +46 8 566 286 32 Jesper Birch-Jensen +46 8 566 286 13

Media Aksel Øverland Engebakken +47 22 01 61 11 Derek Laliberte +46 8 566 286 78

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29 June 2020 ABG Sundal Collier 51